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ISBN 978-952-60-4207-7 (pdf) ISBN 978-952-60-4206-0 ISSN-L 1799-4977 ISSN 1799-4985 (pdf) ISSN 1799-4977 Aalto University School of Science Department of Industrial Engineering and Management www.aalto.fi
BUSINESS + ECONOMY ART + DESIGN + ARCHITECTURE SCIENCE + TECHNOLOGY CROSSOVER DOCTORAL DISSERTATIONS
Aalto-C
5/2
011
Aalto University formally started its operations 1.1.2010, forcing a number of fundamental changes to the old organizations it is based on. These include, but are not limited to, a new top management, new management system and complete reorganization of central administration, new organizational form, moving the whole personnel from public civil service positions to private contracts, major organizational restructuring, and a stated goal of the new top management to change the culture of the university. Such a transformation would be challenging for any organization, but many writers have pointed out that many features of universities make them especially difficult to change. This study uses an extensive data set of staff feedback, top management interviews and Aalto project planning material to construct a model of eight principal sources of organizational inertia to explain and interpret the complex organizational phenomena encountered during the first years of the construction (2007-2010) of a new university.
Markus H
eimonen
Organizational Inertia in a S
trategic Pub
lic Sector M
erger: Case A
alto University
Aalto
Unive
rsity
Department of Industrial Engineering and Management
Organizational Inertia in a Strategic Public Sector Merger: Case Aalto University Markus Heimonen
RESEARCH REPORT CROSSOVER
Aalto University publication series CROSSOVER 5/2011
Organizational Inertia in a Strategic Public Sector Merger: Case Aalto University
Markus Heimonen
Aalto University School of Science Department of Industrial Engineering and Management Institute of Strategy
Aalto University publication series CROSSOVER 5/2011 © Markus Heimonen ISBN 978-952-60-4207-7 (pdf) ISBN 978-952-60-4206-0 (printed) ISSN-L 1799-4977 ISSN 1799-4985 (pdf) ISSN 1799-4977 (printed) Aalto Print Helsinki 2011 Finland
Abstract Aalto University, P.O. Box 11000, FI-00076 Aalto www.aalto.fi
Author Markus Heimonen Name of the publication Organizational Inertia in a Strategic Public Sector Merger: Case Aalto University Publisher School of Science Unit Department of Industrial Engineering and Management Series Aalto University publication series CROSSOVER 5/2011 Field of research Organizational science
Abstract Aalto University is a new Finnish private university that was created 1.1.2010 through the merger of three nationally leading universities of their own fields. The merger incorporated a strategic change effort in all significant activities of the organization, including management system, organizational structure, personnel, and culture in a short timeframe dictated by external political and economic forces. The overall rate of reforms that have been actually implemented during a relatively short transformation period challenges the picture of universities as extremely static organizations. This study focuses on explaining the organizational phenomena observed during the transformation effort by creating a grounded framework of organizational inertia.
The study clearly illustrates the importance of organizational inertia as a concept, and its power to explain and classify complex organizational phenomena as a framework. The developed theory manages to provide an explanation for most of the relevant phenomena encountered during the study, with an apparent focus in institutional, political, legitimacy, and information issues in the public sector case. The study illustrates the significance of cultural, institutional, and decision-making issues, making a university organization a mess of politics, rivalry, problematic leadership, and complex social networks. The results suggest that it may be very hard to lead the people in a university, but the management can certainly make an effort to lead the image of a university by creating a compelling transformation story as well as positive examples and role models, which may be powerful drivers of change.
Furthermore, organizational inertia emerged not only as a force making the change more difficult, but the inertial themes observed in the pre-merger organization formed the rationale for the change itself, suggesting that certain forces can act simultaneously to initiate and inhibit strategic change by increasing the need while decreasing the ability to change.
Keywords organization, inertia, transformation, change management, university, merger ISBN (printed) 978-952-60-4206-0 ISBN (pdf) 978-952-60-4207-7 ISSN-L 1799-4977 ISSN (printed) 1799-4977 ISSN (pdf) 1799-4985 Location of publisher Espoo Location of printing Helsinki Year 2011 Pages 11+162
Tiivistelmä Aalto-yliopisto, PL 11000, 00076 Aalto www.aalto.fi
Tekijä Markus Heimonen Julkaisun nimi Organisaation inertia strategisessa julkisen sektorin yhdistymishankkeessa – Tapaus Aalto-yliopisto Julkaisija Perustieteiden korkeakoulu Yksikkö Tuotantotalouden laitos Sarja Aalto University publication series CROSSOVER 5/2011 Tutkimusala Organisaatiotutkimus
Tiivistelmä Aalto-yliopisto on uusi suomalainen säätiömuotoinen yliopisto, joka muodostettiin 1.1.2010 yhdistämällä kolme omien alojensa kansallisesti johtavaa yliopistoa. Yhdistyminen piti sisällään yliopiston kaikkien ydintoiminnallisuuksien strategisen kehittämisen, mukaan lukien esimerkiksi johtamisjärjestelmän, organisaatiorakenteen, työsuhteiden ja kulttuurin uudistamisen ulkoisten poliittisten ja taloudellisten voimien sanelemassa tiukassa aikataulussa. Merkittävä osa suunnitelluista muutoksista on myös kyetty implementoimaan lyhyessä ajassa, mikä osin haastaa käsitystä yliopistoista erittäin staattisina organisaatioina. Tämä työ keskittyy selittämään muutoshankkeen aikana havaittuja organisatorisia ilmiöitä havaintoaineiston pohjalta luodun inertiamallin avulla.
Tutkimus osoittaa selvästi organisaation inertian merkityksen konseptina, sekä inertian kyvyn selittää ja luokitella organisatorisia ilmiöitä mallina. Työssä luotu teoria onnistuu tarjoamaan selityksen useimpiin tutkimuksen aikana havaittuihin merkittäviin ilmiöihin, nostaen esiin tutkitun julkisen sektorin yhdistymishankkeen tapauksessa erityisesti institutionaalisia, poliittisia, legitimiteettiin liittyviä ja informaatiotekijöitä. Tutkimus osoittaa kulttuuristen, institutionaalisten ja päätöksentekokysymysten merkityksen yliopistoille, joista piirtyy kuva politiikan, omaneduntavoittelun, ongelmallisen johtamisen ja monimutkaisten sosiaalisten verkostojen värittämänä sekasotkuna. Tulokset antavat syytä olettaa, että ihmisten johtaminen yliopistossa on haastavaa. Johto voi kuitenkin selvästikin johtaa yliopiston imagoa luomalla onnistuneen muutostarinan sekä tuottamalla esimerkkejä ja esikuvia, ja nämä voivat toimia tehokkaina muutosajureina.
Lisäksi tutkimuksessa osoittautui, että organisaation inertia ei toimi pelkästään muutosta vaikeuttavana voimana, vaan tosiasiassa muutosta edeltävässä organisaatiossa havaitut inertiatekijät muodostivat perustelun itse muutokselle. Näin ollen vaikuttaa siltä, että tietyt organisaatioissa vaikuttavat tekijät voivat samanaikaisesti aikaansaada ja estää strategista muutosta lisäämällä tarvetta mutta heikentämällä kykyä muutokseen.
Avainsanat organisaatio, inertia, muutos, muutosjohtaminen, yliopisto, yhdistyminen ISBN (painettu) 978-952-60-4206-0 ISBN (pdf) 978-952-60-4207-7 ISSN-L 1799-4977 ISSN (painettu) 1799-4977 ISSN (pdf) 1799-4985 Julkaisupaikka Espoo Painopaikka Helsinki Vuosi 2011 Sivumäärä 11+162
Acknowledgements
This study could not have been completed without the support of certain
individuals that I wish to thank here.
First of all I wish to express my thanks and respect to the Aalto
University management for their courage to submit their own ongoing work
under a critical examination. I want to especially thank President Tuula
Teeri and development director Jari Jokinen for their personal
encouragement and many interesting conversations, both related and
unrelated to this study. Furthermore, I wish to thank Marianna Bom, Ritva
Dammert, Eero Kasanen, Hanna-Leena Livio, Heikki Mannila, Saku
Mantere, Matti Pursula, Pekka Saarela and Hannu Seristö for being
available to be interviewed.
Furthermore, I wish to thank professor Juha-Antti Lamberg for his
inspiring guidance throughout the project and urging to go beyond the
obvious, and researcher Jari Ylitalo for sharing his valuable data and
advice.
Lastly, I thank all the innumerable individuals with whom I have had the
chance to discuss about Aalto University in recent years. Your comments
are written in between the lines of these pages.
Markus Heimonen Otaniemi, June 2011
Contents
Acknowledgements ......................................................................................
List of Tables................................................................................................
1. Introduction ........................................................................................ 2
1.1 Background and motivation ........................................................ 2
1.2 Objectives and Research Approach ............................................. 4
1.3 Structure ...................................................................................... 5
1.4 A Perspective on Organizations ................................................... 7
1.4.1 Organizational Planning View .............................................. 7
1.4.2 Social System View ............................................................. 10
1.4.3 Open System View ............................................................... 11
1.4.4 Organizational Change ....................................................... 13
1.4.5 Adaptation or Selection? .................................................... 15
2. Research Site: Aalto University ..................................................... 17
2.1 General ....................................................................................... 17
2.2 History ....................................................................................... 18
2.2.1 Predecessors ....................................................................... 18
2.2.2 The Purpose and Goals of Aalto University ........................20
2.2.3 Timespan ............................................................................ 22
2.3 Aalto University in Numbers ..................................................... 24
3. Theoretical Framework ................................................................. 25
3.1 Overview .................................................................................... 25
3.2 Organizational Inertia ................................................................ 28
3.2.1 Sunk Costs .......................................................................... 29
3.2.2 Information Constraints .....................................................30
3.2.3 Internal Political Constraints ............................................. 32
3.2.4 Internal Institutional Constraints ...................................... 36
3.2.5 Barriers of Entry/Exit ......................................................... 39
3.2.6 External Legitimacy Constraints ....................................... 40
3.2.7 Limitations of Collective Rationality: The Garbage Can
Model ............................................................................................ 43
3.2.8 Limitations of Learning ...................................................... 45
4. Methodology.................................................................................. 47
4.1 Research Design and Analytical Approach ............................... 47
4.2 Data Collection .......................................................................... 48
5. Data and Analysis .......................................................................... 55
5.1 Triggers of Change: Inertia in the Old System .......................... 62
5.1.1 Triggers of Change: Planning 2007-09 ............................. 62
5.1.2 Triggers of Change: Implementation 2009- ...................... 67
5.1.3 Triggers of Change: Feedback from the Staff – Hopes for a
Better Future ........................................................................................ 77
5.2 Change Context: Inertia in the Transformation ........................ 80
5.2.1 Change Context: Planning 2007-09 ................................... 80
5.2.2 Change Context: Implementation 2009- ........................... 92
5.3 Leaders‘ Responses ................................................................... 111
5.3.1 Leaders‘ Responses: Planning 2007-09 ............................ 112
5.3.2 Leaders‘ Responses: Implementation 2009- .................... 118
5.4 Change Context: Feedback from the Staff – Fears and
Resistance............................................................................................... 130
5.5 The Relative Significance of the Emergent Themes ................. 137
6. Discussion .................................................................................... 141
6.1 Organizational Inertia in Aalto University ............................... 141
6.1.1 Sunk Costs ......................................................................... 141
6.1.2 Information Constraints .................................................. 142
6.1.3 Internal Political Constraints ........................................... 144
6.1.4 Internal Institutional Constraints ..................................... 147
6.1.5 Barriers of Entry/Exit ...................................................... 149
6.1.6 External Legitimacy Constraints ...................................... 150
6.1.7 Limitations of Collective Rationality ................................ 151
6.1.8 Limitations of Learning..................................................... 152
6.2 Limitations and suggestions for further research .................... 153
6.3 Conclusions .............................................................................. 155
References ...................................................................................................
List of Tables
Table 1: Key figures of Aalto University (2010) ........................................... 24
Table 2: The Informants............................................................................... 49
Table 3: Planning phase 2007-09: 1st order categories by 2nd order themes
and aggregate dimensions ............................................................................ 57
Table 4: Implementation phase 2009-: 1st order categories by 2nd order
themes and aggregate dimensions ............................................................... 58
Table 5: Staff Feedback 2009: 1st order categories by 2nd order themes and
aggregate dimensions ................................................................................... 59
Table 6: The relative significance of emerging themes .............................. 138
Background and motivation
1. Introduction
”The history of any one part of the Earth, like the life of a soldier, consists
of long periods of boredom and short periods of terror.”
-Derek Victor Ager
1.1 Background and motivation
The Finnish system of higher education is in turmoil. Universities are facing
growing pressures of global competition for the best talent, of national
private sector –driven demand for well-educated workforce with diverse
problem solving skills, and of decaying public funding. The very
foundations of the Nordic well-fare state itself are at risk. As an answer to
the challenges, a major national university reform is taking place, including
changes in legislation, funding and goals concerning the universities. All
universities have been given more economic freedom through transforming
their legal persons from government agencies to autonomous entities.
Furthermore, a number of new universities have been formed through
mergers.
Spearheading the entire reform is the forming of the new Aalto
University, a project officially started in 2007 under the label ―Innovation
University‖. Aalto is an ambitious endeavor of national scale, striving to be
recognized globally as a top-class university in 10 years and being created
through the merger of three national number one universities in their own
fields: Helsinki University of Technology (TKK), Helsinki School of
Economics (HSE) and University of Industrial Art and Design Helsinki
(TaiK).
To make the Aalto-project possible, the Finnish government has made
the new university major contributions both in funding and in customizing
legislation for the needs of Aalto. In addition, Finnish industries have
played a major part in lobbying for and funding the university. This ―special
treatment‖ has ensured Aalto a place at the heart of Finnish public debate
concerning the university reform and geographic distribution of
government funding across the country, contributing to high political stakes
and ensuring continued media attention with the project.
Aalto University formally started its operations 1.1.2010, forcing a
number of fundamental changes to the old organizations it is based on.
3 Introduction
These include, but are not limited to, a new top management, new
management system and complete reorganization of central
administration, new private foundation -based organizational form with
increased financial responsibilities, moving the whole personnel from
public civil service positions to private contracts, major organizational
restructuring, and a stated goal of the new top management to change the
culture of the university.
Indeed, such a profound transformation would be challenging for any
organization. An important further flavor here, however, is that we are
considering a public university transformation. Several writers have
described the general characteristics of university organizations. For
instance Hannan and Freeman (1989: 113) described modern universities
as ―holding companies‖ with limited central authority causing several
problems such as strategic focus shifts based on popular trends and PR-
value, difficulties in setting up and closing down subunits, and resource
reallocation from good-performing units to bad ones. Mintzberg (2009:
241-273) gives universities as an example of organizations with a diversity
of internal political games. Meyer and Rowan (1977) argued that
universities, R&D units and government agencies maintain a façade of
standardized, legitimated, formal structures while actually allowing
variation in internal processes because of practical considerations.
Furthermore, Cohen, March and Olsen (1972) introduced universities as a
prime example of their ―garbage can model‖ where decision making is
accidental and is the product of problems and solutions that get associated
randomly. Scott (2003) describes the problems of overconformity and goal
displacement typical in large bureaucratic organizations. All in all, it should
be safe to claim that most common features of universities do not make
organizational changes easier, but rather more difficult.
Obviously, this highly volatile combination of extraordinary ambition,
exceptional possibilities and great challenges makes Aalto University both
an organization in demand of outstanding leadership, and a test platform
providing a most interesting setting for scientific study. This study makes
an effort to contribute both, management and science.
From a managerial point of view, the challenge is how to simultaneously
affect a turnaround and a merger in a set of traditional academic
institutions with strong and diverse cultures and long histories. Here the
key contribution of organization science is a reality check. Therefore, my
purpose is not to tell the management how to make good decisions, or, even
less, what decisions to make. My purpose is to point out and explain
organizational phenomena, affecting and limiting the consequences of
Objectives and Research Approach 4
managerial decisions. I try to provide insight to the question, why
organizations often are difficult to change. In particular, I seek to find out
why there is observable inertia also in this merger of three universities, and
what could be done about it. Moreover, I believe that during the course of
creating this study, I have had the chance to ask a number of difficult
questions from the correct people, sparking new ideas and focusing
managerial attention to relevant areas, even if these issues are outside the
scope of this work and thus not documented here.
The starting point of my scientific perspective is the fundamental thesis
of organizational ecologists who claim that organizations have trouble
changing because of structural or organizational inertia (see e.g. Hannan
and Freeman (1977, 1984, 1989), Barnett and Carroll (1995), Aldrich
(1999), Scott (2003), Hannan, Pólos and Carroll (2003), and Pólos and van
Witteloostuijn (2004)). Even though organizational ecology as a whole may
lie quite far from the mainstream of strategic research (Mintzberg 2009:
367, 384), I embrace this school of thought as a starting point for three
main reasons.
First, I expect many of the challenges involved in Aalto project to revolve
around organizational inertia. Because the whole concept of inertia has
been developed by the ecologists (Hannan and Freeman 1977, 1984) and it
remains at the core of their research, I believe the organizational ecology
perspective to be the most refined in advancing understanding of inertia.
Second, despite the efforts to explain organizational inertia and the fact
that basically all organizational research has taken inertia into account at
least to some degree since its introduction, the theoretical concept of inertia
remains somewhat ambiguous. The question ―What is organizational
inertia?‖ remains largely unanswered, and there is room and need for
further research.
Third, I believe that by choosing a less charted path my chances are
increased to contribute fresh approaches not yet covered in the theoretical
background of the Aalto planners.
Finally, a great motivation for this work is the very fact that Aalto
University is the spearhead of the Finnish higher education reform. It is
much more likely that Aalto will be the beginning, not the end of the
reform. Thus any understanding of Aalto will contribute to the future of the
entire Finnish system of higher education.
1.2 Objectives and Research Approach
From the setting of making a study of organizational inertia in an ongoing
public university merger, and the need to both contribute scientific
5 Introduction
understanding of inertia and to provide tools for the management in their
challenging task, we arrive to the following research question I seek to
answer:
How has organizational inertia affected the forming of the Aalto
University?
Which are the most significant causes of inertia in the
forming of Aalto University?
What features of universities make them more
susceptible to inertia?
What are the characteristic features of Aalto University
and how do they contribute to inertia?
How have the management‘s plan and actions to control
the merger contributed to inertia?
By answering these questions, I construct a set of data that can be grouped
into theoretical categories. Once formed, these categories represent
different root causes of inertia. Answering the questions provides insight to
the Aalto project, but also contributes to the knowledge of organization
theory about university mergers.
1.3 Structure
The contents of this study are organized as follows. The structure is
visualized in Figure 1 on the following page.
This subchapter concerning structure is followed by a brief overview of
general organizational theory that binds the perspective of this work to
wider context of organizational studies. The Introductory part is followed
by Part I: Background, the two chapters of which chart the physical and
theoretical premises of the thesis. First, the starting point of Aalto
University is explained through an overview of the three old universities it
is based on, and a brief history of the merger itself. Then a literature review
follows, discussing organizational inertia as a whole as well as its most
essential component parts as identified by this study.
After setting the scene for this research, we proceed to Part II: Empirical
Examination, which comprises the empirical contribution of this work. The
research methods are explained in Chapter 4, after which the empirical data
is presented and analyzed in Chapter 5.
Finally, the study is concluded in Part III: Contribution, discussing the
theoretical and practical findings of the work in Chapter 6.
Structure 6
Part I: Background
Part III: Contribution
Part II: Empirical
Examination
6. Discussion
5. Data and Analysis
4. Methodology
3. Theoretical Framework:
Organizational Inertia
2. Research Site: Aalto University
1. Introduction Introduction
7 Introduction
1.4 A Perspective on Organizations
Organizations are the dominating force responsible for most of the
activities that take place in our world. In the social sciences, organizations
are the object of analysis for a number of disciplines, such as sociology,
economics, political science, psychology, management, and organizational
communication. The variety of disciplines interested in organizations
illustrates both their significance and the diversity of different possible
perspectives that can be chosen for their research.
Because it is difficult to cover the different sides of organizations from a
single point of view, three perspectives are used for the purposes of this
thesis. As we are studying here a planned organizational change, and the
effects of inertia on it, it is natural to choose the perspective of
organizational planning as our first point of view. After discussing the
organizational planning view we are left with the ―reality‖ of the
organization. Obviously one fundamental aspect is the social reality of the
organization, that is, the organization as a social system. This ‗social system
view‘ is our second perspective. Finally, it is also necessary to consider the
interactions of the organization with its environment, namely to consider
the organization as an open system. Therefore we end up with three lenses
through which to review the literature for general properties of
organizations.
The purpose of this Chapter is to introduce these lenses and the general
perspective of this thesis on organizations, to make it easier to see what lies
beyond the focus of this work and where we stand.
1.4.1 Organizational Planning View
The name of this chapter could as well be for instance ‗strategy making‘,
‗rational control‘, ‗prescriptive school‘ or ‗managerial‘ view. The point is to
elaborate the side of organizations literature providing managers tools and
approaches for rationally controlling and shaping their organizations.
The organization science itself has its origins in the work of the
numerous founding fathers of this field. Frederick Taylor (1911) with his
followers started the era of scientific management with mechanistic
optimization of routines. Philip Selznick (1957) and Henri Fayol (1949
trans.) emphasized the role of the top management in rationalizing the
organization from top down. Weber (1968 trans.) defined different forms of
authority, each associated with a distinctive administrative structure, and
introduced the modern bureaucracy with specialized administrative staff as
A Perspective on Organizations 8
the most highly developed form of formalization. Chandler‘s (1962) maxim
that organizational structure must follow strategy is influential even today.
Writers like Igor Ansoff (1965) and Kenneth Andrews (1971) have
provided tools and instructions for analysis and strategy making process
while Michael Porter followed the footsteps of military strategists like Sun
Tzu (1971 trans.) and Carl von Clausewitz (1968 trans.) when he provided
the management his famous tool box of ―Competitive Strategy‖ in (1980)
which he later supplemented with ―Competitive Advantage‖ (1985). To
support understanding of change management, Danny Miller (1976)
introduced different archetypes of strategy formation that were either
successful (like ―The Dominant Firm‖) or unsuccessful (like ―The
Aftermath‖, where a new team is trying to affect a turnaround with scarce
resources and inadequate experience). The idea was later further developed
by Mintzberg (1989) into organizational configurations that define the fit
between different dimensions of organization during its life course. Miller
and Friesen (1980) also introduced the concept of ―quantum change‖
between stable periods during the life cycle of organizations, a theme
advanced further by Pettigrew (1987).
Considering change management, one of the central debates is the one
between top-down and bottom-up change. The former has been
traditionally the dominant view – that it is the job of top management to
envision, initiate and see through major transformations of the
organization (see e.g. Beatty and Ulrich (1991), Baden-Fuller and Stopford
(1992) and Kotter (1995)). However, the latter view emphasizing long-term
impact of change through involvement and commitment of participants has
been gaining more ground since the 1990s (see e.g. Beer, Eisenstat and
Spector (1990), and Dickhout, Denham and Blackwell (1995)). Instructions
for managers to enforce top-down or enable bottom-up transformation are
illustrated in the following ―checklists‖.
Top-Down: ―Eight steps to Transforming Your Corporation‖ by Kotter
(1995: 61)
1. Establishing a sense of urgency
2. Forming a powerful guiding coalition
3. Creating a vision
4. Communicating the vision
5. Empowering others to act on the vision
6. Planning for and creating short-term wins
9 Introduction
7. Consolidating improvements and producing still
more changes
8. Institutionalizing new approaches
Bottom-Up: ―Six Steps to Effective Change‖ by Beer, Eisenstat and Spector
(1990: 161-164)
1. Mobilize commitment to change through joint
diagnosis of business problems.
2. Develop a shared vision of how to organize and
manage for competitiveness.
3. Foster consensus for the new vision, competence
to enact it, and cohesion to move it along.
4. Spread revitalization to all departments without
pushing it from the top.
5. Institutionalize revitalization through formal
policies, systems, and structures.
6. Monitor and adjust strategies in response to
problems in the revitalization process.
These ―checklists‖ illustrate well the two sides of the coin that I have called
here the ―organizational planning view‖.
On one hand, they illustrate the need for management science to come
up with concrete hands-on tools that can readily be utilized by decision
makers in the hectic pace of real life challenges faced by organizations. At
their best, such recipes can bring some order in the often chaotic reality by
introducing frameworks and structured approaches for solving difficult
problems. This field of organizations theory also provides ammunition for
the consultants of the strategy industry and professionals of the planning
departments, defining the discourse and language of management. As such,
the impact of such practical approaches may be great indeed.
On the other hand, however, such ―no-nonsense approaches‖ are
severely limited in their power to explain and control complex phenomena
inherently present in real organizations. These limitations are discussed in
following chapters.
A Perspective on Organizations 10
1.4.2 Social System View
The purpose of this chapter is to elaborate the approaches of sociology and
psychology to consider organizations as complex social systems.
Things always start to get messy, when the dreaded human factor is
involved. For instance Scott (2003: 28) defines organizations as follows:
Organizations are collectives whose participants are
pursuing multiple interests, both disparate and common, but
who recognize the value of perpetuating the organization as
an important resource. The informal structure of relations
that develops among participants is more influential in
guiding the behavior of participants than is the formal
structure.
Therefore an organization is not just formal structure plus the idiosyncratic
beliefs and behaviors of individual participants, but rather both a formal
structure and an informal structure: informal life itself is structured and
orderly. There is also a disparity between the stated and the ‖real‖ goals
pursued by organizations, and even the real goals are not the only goals
pursued, but organization has to expend energy to ―support‖ or
―maintenance‖ goals to maintain itself. Yet there is one even more
important goal, survival, which governs formal organizations like all other
social groups (ibid.: 57). Also Hannan and Freeman (1989: 6) note that
organizations have the tendency to live a life of their own, and that they are
an expensive means for accomplishing their goals. Furthermore, Selznick
(1948: 29) emphasizes the primitive reactions of the collective system:
A given empirical system is deemed to have basic needs,
essentially related to self-maintenance; the system develops
repetitive means of self-defense and day-to-day activity is
interpreted in terms of the function served by that activity for
the maintenance and defense of the system.
Michels (1949 trans.: 390) continues that if the interests of the rank-and-
file members diverge from those of the leaders, the former are likely to be
sacrificed.
From the social point of view, it becomes more reasonable to examine
what is really done rather than what is decided and planned. In such case
commitment and motivation also become more relevant variables than
search and choice, if action rather than ―talk‖ is the focus (Scott 2003: 59).
11 Introduction
McGregor (1960) notes that highly centralized and formalized structures
are doomed to be ineffective and irrational in that they waste the
organization‘s most precious resource, namely the intelligence and
initiative of its participants.
Another early theory development is the concept of authority in social
systems. For instance Pelz (1952) suggested that a supervisor‘s relation to
his or her own superior, and specifically his or her influence upward, is a
powerful determinant of the supervisor‘s influence over his or her own
subordinates. Barnard (1938: 163) stated that the decision as whether an
order has authority or not lies with the persons to whom it is addressed,
and does not reside in ‗persons of authority‘ or those who issue these
orders. Because of these limitations to authority, he continued that the most
critical ingredient to successful organization is the formation of a collective
purpose that becomes morally binding to participants. The developing and
imparting of such mission and the creation of moral codes for others is the
distinctive function of the executives (ibid.: 279).
What makes the situation for executives here difficult, however, is that to
survive the organizations may change their reasons for existence and thus
their unifying purposes (ibid.: 89). Furthermore, as Scott (2003: 70) notes,
the very process of making critical decisions to change the structure or
purpose of the organization alters the character of the organization.
This perspective forms much of the foundation on which the
examination of internal causes of inertia in later chapters is based.
1.4.3 Open System View
The previous two chapters have introduced two perspectives for considering
the internal activities of a well-defined entity called organization. The
purpose of this chapter is to introduce a third view that places the
organization into the context of its environment and considers it as a
systemic part of a larger system.
For instance Aldrich (1999) defines organizations as ―goal directed,
boundary maintaining, activity systems‖. The organizations face four main
challenges, which are (ibid.: 113)
i. mobilizing knowledge and resources
ii. using them effectively
iii. reproducing organizational knowledge
iv. maintaining organizational boundaries
A Perspective on Organizations 12 Here the concept of organizational boundaries is essential. What
happens within organizational boundaries must matter to enough members
so that organizational routines and competencies are replicated from one
day to the next, and organizational boundaries are maintained. However,
except for ‗total institutions‘ such as prisons or armies (see e.g. Goffman,
1961) members have control over their entry or exit to/from the
organization, and most people are members of multiple organizations,
resisting the idea of being resources of any particular organization
(McPherson, 1983). This creates an intricate network of memberships and
loyalties blurring the organizational boundaries.
Furthermore, this is in line with Scott‘s (2003: 29) definition that
―organizations are congeries of interdependent flows and activities linking
shifting coalitions of participants embedded in wider material-resources
and institutional environments‖. This is also a process view of
organizations, focusing not on the static structure but on the dynamic
action keeping the organization alive. Or, as Scott puts it (ibid.: 100):
If structures exist it is because they are continuously being
created and recreated, and if the world has meaning, it is
because actors are constructing and reconstructing
intentions and accounts and, thereby, their own and others
identities.
The process perspective allows for a multitude of nonconventional
interpretations for organizations. For instance Nohria and Eccles (1992)
describe organizations as networks, Cyert and March (1963) as shifting
coalitions, Jensen and Meckling (1976) as a nexus of contracts and
Czarniawska (1997) as ongoing narratives and conversations among
participants.
Environments influence organizations in numerous fundamental ways.
One example is what Pondy and Mitroff (1979: 7) called the ―law of limited
variety‖, meaning that a complex system cannot maintain its complexity in
a simple environment, and that a system will not exhibit more variety than
the variety to which it has been exposed in its environment. The flipside of
this interpretation is that an organization has to develop a complex form to
successfully interact with a complex environment.
Another example is the contingency theory coined by Lawrence and
Lorsch (1967) and Galbraith (1973), who lists the basic assumptions of the
theory as
1) There is no one best way to organize; however
13 Introduction 2) Any way of organizing is not equally effective.
3) The best way to organize depends on the nature of the environment
to which the organization relates.
Here the contingency theorists challenge those administrative theorists who
have sought to offer general recipes applicable for any organization. Instead
they claim that a successful organization forms a fit between its internal
capabilities and the demands of its environment.
Third example of profound interaction between an organization and its
environment is that the environment is the context in which the process of
selection in ecological sense takes place. The concept of organizational
change through processes of selection and adaptation is discussed in the
next chapter.
1.4.4 Organizational Change
By definition, ―organizational change‖ involves a transformation of an
organization between two points in time, distinguishing the organization
―before‖ and ―after‖ the change. The change itself can be analyzed from two
main perspectives, namely from the process or content point of view
(Barnett and Carroll, 1995).
The process view concentrates on the transformation itself, examining
for instance the speed of change, the sequence of activities, the decision-
making and communication system and the resistance encountered (ibid.).
Another possibility is to compare what actually differs in the organization
after the change, which is the approach of the content based view (ibid.).
It is typical that many theories of organizational change discuss only one
of these perspectives. However, in practice they can seldom be analyzed
independently, as portrayed for instance by Johnson (1987):
It is likely that the change process that occurs will be,
relatively speaking, ill-defined and general. Members of the
organization will know that change is occurring but may not
be that clear about where it is leading or what it signifies.
However, it may be that this process of change is a necessary
precursor to the introduction of specific strategies.
What is it then that changes in an organization during a transformation?
For instance Hannan and Freeman (1984) classify changes to core and
peripheral changes. Peripheral changes are easier and not as risky as core
A Perspective on Organizations 14
changes, which are rare and costly and seem to subject an organization to
greatly increased risks of death. According to Hannan and Freeman these
core features are in hierarchical order organization‘s mission, its authority
structure, its technology and its marketing strategy. Here a change of
mission represents the most fundamental possible change for an
organization, requiring also a change in all the other core features lower in
the hierarchy.
Another important aspect of organizational change is the idea of
organization‘s development through time. Van de Ven and Poole (1995)
identify four different approaches to change:
1) Life cycle theories embrace a metaphor of organic growth and
attempt to identify stages in the development of the organization
from its initiation to its termination. Change is viewed as immanent:
the organization is thought to contain an underlying logic or
program that regulates the process of change. Here the idea is that
as an organization grows, also certain structural transformations
should occur. A typical example would be that a successful and
growing start-up company cannot retain its system of direct and
informal control by owner-managers after some point in its
evolution.
2) Teleological theories posit that the organization is purposeful
and adaptive and goal-directed. Development is viewed as an
iterative process of goal setting, implementation, evaluation and
goal modification.
3) Dialectical theories assume that the organization exists in a
pluralistic world of conflicting forces that compete with one another
for domination. Stability and change are explained by alterations in
the balance of power among opposing entities.
4) Evolutionary theories assume that change occurs through a
continuous cycle of variation, selection and retention. New elements
such as rules or routines arise through random change and selection
occurs primarily through the competition for scarce resources, and
retention preserves them through some type of copying or
reproduction process.
These perspectives underline the fact that the selection of a relevant
perspective is of great importance when trying make relevant observations
about complex organizations. The chosen perspective dictates what can be
seen and what escapes attention.
15 Introduction
1.4.5 Adaptation or Selection?
For decades, the field of organizational research has been much divided in
two separate camps, whose main debate revolves around the question how
flexible and thus how able to change organizations are considered to be.
The followers of the adaptive camp assume that change in the world of
organizations occurs mainly through the adaptive responses of existing
organizations to prior changes in their environment (Barnett and Carroll
1995). The camp is supported for instance by such influential proponents of
generic strategies like Porter (1980) and Miles and Snow (1978), and the
proponents of configuration theory like Mintzberg (1989) advocating that
the main concern of organizations is to find an optimal configuration of key
organizational attributes. A switch to a more advantageous configuration is
defined as adaptive, while a switch to a less advantageous configuration is
defined as deleterious (Amburgey et al 1993). Other theories that can be
placed in the adaptational camp include contingency theory (Lawrence and
Lorch 1967), resource dependence theory (Pfeffer and Salancik 1978),
institutional theory (Meyer and Rowan 1977) and transaction cost
economics (Williamson 1975).
On the contrary, the selection camp assumes that individual
organizations cannot change easily, and even if they do they still cannot
change as fast as their environments. Change is both difficult and
hazardous. Therefore when the environment changes, some existing
organizations fail, making room for new ones with a better fit with the new
environment. According to the selection camp, most fiercely defended by
the organizational ecologists, this cycle of selective replacement is the main
source of change and diversity in organizations (Barnett and Carroll 1995).
Some advocates of the selection camp emphasize internal factors of the
organization inhibiting adaptation, such as how change is often opposed by
organizational members (Coch and French 1948). Even when change is
supported by some members, established roles and formal organizational
rules are difficult to alter quickly (Tsouderos 1955, Stinchcombe 1965,
McNeil and Thompson 1971, Hannan and Freeman 1977 and 1984). Other
writers focus on the external linkages between the organization and its
environment and suggest that resistance to change occurs because
organizations are embedded in the institutional and technical structures of
their environment (Granovetter 1985, DiMaggio and Powell 1983, Scott
1987). Zajac and Kraatz (1993) claim this kind of behavior to be particularly
common in non-profit industries. The key concept of the selection camp is
A Perspective on Organizations 16
that of organizational inertia, i.e. lack of ability to change, which will be
discussed in depth in chapter 3.
For the purposes of examining organizational inertia, the work of the
selection camp will have a more prominent role in the following pages.
Naturally, this is very much a matter of choosing a relevant perspective,
meaning that it is not necessarily the only possible perspective.
Even though the division in the field of organizational theory seems
sometimes impregnable, in practice the camps have successfully influenced
each other during the past decades. Selection theorists admit that
individual organizations do sometimes successfully change, and adaptation
theorists recognize that some organizations fail because they do not change
when and how they should (Barnett and Carroll 1995). For instance
Amburgey et al (1993) suggest that organizational change can be both
disruptive and adaptive, and organizational inertia can actually increase the
likelihood of organizational change.
Zajac and Kraatz (1993) note, that the nature of the disagreement
between the camps is rooted partly in the fact that different researchers
often emphasize different aspects of environmental or organizational
forces. The selection theorists emphasize those forces that inhibit the ability
of organizations to change, while the adaptationists focus on the forces that
initiate change. Furthermore, the researchers focusing on the same forces
may fail to consider that certain forces can act simultaneously to initiate
and inhibit strategic change by increasing the need while decreasing the
ability to change (ibid.).
Finally, Hannan and Freeman (1977) argue that a subtle relationship
exists between adaptation and selection: Adaptive learning for individuals
usually consists of selection among behavioral responses, and adaptation
for a population involves selection among types of members. Aldrich (1999:
194) sums this by concluding, that an organization that is unable to change
is always at risk in a changing environment. Then if most of the members in
a population are unable to change, the population can survive only through
two methods, namely through new organizations being born into the
population, or through copying the methods of such members that have
successfully lived through the inevitable change. If both of these methods
fail, the population itself can be overrun by another more successful
population.
17 Research Site: Aalto University
2. Research Site: Aalto University
2.1 General
Aalto University is a new Finnish foundation based university that started
its operations January 1st 2010. Aalto was created through the merger of
Helsinki University of Technology (TKK), Helsinki School of Economics
(HSE) and University of Art and Design Helsinki (TaiK), all being the oldest
and largest institutions in Finland within their own field. Private
foundation based universities have been extinct in Finland since 1970s, and
therefore Aalto also incorporates a new organizational form with the sole
other foundation university in Finland, Tampere University of Technology,
which was created at the same time but without a merger.
As of May 2011, Aalto University operates on three main campuses
around the Helsinki metropolitan area representing the three preceding
universities, and has additional specialized smaller units in Mikkeli, Lahti,
Pori and Vaasa, and internationally in Singapore and Shanghai. The
organization of Aalto University is based on central administration with
support services, and six academically independent schools, four of which
specialize in technology, one in business and one in art and design.
To make the Aalto-project possible, the Finnish government has made
the new university major contributions both in funding and in customizing
legislation for the needs of Aalto. In addition, Finnish industries have
played a major part in lobbying for and funding the university. This ―special
treatment‖ has ensured Aalto a place at the heart of Finnish public debate
concerning a wider university reform spearheaded by Aalto, and geographic
distribution of government funding across the country. The limelight of
publicity has contributed to high political stakes and ensured continued
media attention with the project.
The goals of the new university have been set high, as it aims to be
globally recognized as a top-class university by 2020 (Aalto University
Strategy 2010).
History 18
2.2 History
2.2.1 Predecessors
2.2.1.1 TKK - Helsinki University of Technology
Engineering education in Finland began at the Technical School of Helsinki
in 1849. Later the school was renamed Polytechnic School in 1872 and
Polytechnic Institute 1879, which received university rights and was
renamed the Technological University of Finland 1908. The university
moved from its old premises at Hietalahti Market in Helsinki to Otaniemi,
Espoo in 1950s, creating the first American-style integrated university
campus in Finland (Nykänen 2008). During its last operating year 2009
TKK employed 3979 people, of which 215 were professors, and had 15 000
under- and postgraduate students. The total funding from state and other
sources of the university was 313 million euros (TKK annual report 2009).
Basically all fields of engineering were researched and taught at TKK.
Several TKK key strengths are listed in Aalto University project plan
analysis (Aalto University 2008). These include high industry relevance
with good and multiple relations with industry, and several world-class
research groups with competitiveness in EU and industrial programs. The
international reputation of TKK is considered ―satisfactory‖, but nationally
the majority of the best students are believed to prefer TKK, it being the
largest, oldest and most popular place to study technology in Finland. Also
the foundations of most high technology businesses and especially the
traditional key areas of Finnish industry, such as pulp and paper and
telecommunications, are believed to be based on TKK expertise.
Furthermore, the Finnish economy is dominated by top management
educated at TKK.
Aalto planners (ibid.) have also recognized several internal challenges
preventing TKK from harnessing its full potential. Focusing resources was
difficult contributing to heterogenic research culture and results.
Bureaucracy loaded the academic staff, and rigid governance model, control
culture and inefficient and costly processes burned-out people.
Infrastructure needed enhancement, and there were far too many students
per teacher contributing to long studying times. Most teaching and research
was chronically underfunded, and the gathering of research funding was
further hindered by lack of long-term partnerships. It had also proven
difficult to create startup spin-offs that would grow and operate
internationally.
19 Research Site: Aalto University
2.2.1.2 HSE - Helsinki School of Economics
Helsinki School of Economics was established by the business community
in 1904 and got its university standing 1911. New law guaranteed the private
university 70% state support 1950, when its current main building was also
inaugurated in Töölö, Central Helsinki. In 1970s HSE became a state
university, and started its Executive Education program, which has since
produced a sizeable portion of the total funding of the university through a
separate HSE-owned company (Aalto University 2008). During its last
operating year 2009 HSE employed 546 people, 46 of which were
professors, and had 4000 students. The total funding of the university from
the state and other sources was 42 million euros (HSE annual report 2009).
Aalto planners (Aalto University 2008) characterize the strengths of
HSE as follows. HSE was small and agile with a strong community feeling.
It was the leader in management education in Finland, and had extensive
MBA and eMBA programs abroad. The university distinguished itself
internationally with several high-profile accreditations. Cooperation with
companies was successful, contributing to practice-oriented teaching and
professors active in boards and consulting. Also language training was of
high quality and the international exchange program was extensive.
However, also HSE faced many internal challenges (ibid.). Little time
was committed to research, and there was a lack of researcher exchange
programs, career paths and focus areas, and salaries and compensations
were not perceived as competitive. As in TKK, the student/teacher –ratio
was perceived as too high, and studies were often characterized by lack of
commitment on both sides, which was emphasized by a wide variation in
the performance of students. The pedagogical skills of faculty were limited,
and there were little incentives to improve teaching. Furthermore, the
Aalto-merger was partly seen as a threat to the identity and independence
of HSE.
2.2.1.3 TaiK - University of Art and Design Helsinki
―Pro Arte Utili – for useful art‖ had been the motto of the University of Art
and Design Helsinki and its predecessors for the past 139 years. Originally
founded as the School of Arts and Crafts in 1871, TaiK got its university
status in 1973. In 1990s TaiK started consistent efforts to focus on new
media, and has since internationalized rapidly with applications from 54
countries and growing to be the largest university on its own field in
Scandinavia (Aalto University 2008). During its last operating year 2009
TaiK employed 430 people, of which 39 were professors, and had 2000
History 20
students. The total funding of the university from the state and other
sources was 38 million euros (TaiK annual report 2009).
TaiK had many positive features characteristic for a successful top-class
university. It boasted a small fraction of accepted students from all
applicants (7,6% in 2009) and excellent student/teacher –ratio (11,4 in
2009) (ibid.). TaiK had a strong identity and its culture was considered
open and discussing with active international contacts with the best
universities such as MIT, Harvard and Stanford, and with global
corporations such as Nokia, Toyota, Hyundai, Canon, ABB and Panasonic
(TaiK annual report 2009). TaiK was also an active participant in Finnish
cultural life, and a strong tradition of entrepreneurship existed among
alumni (Aalto University 2008). The teaching culture in TaiK was
considered student based with integration of practice and theory in
teaching and a tradition of problem based collaborative learning. TaiK was
also a worldwide pioneer in research in its own field (ibid.).
However, also TaiK had a number of challenges (ibid.). Tradition of
interdisciplinary collaboration within the university was weak, and the
culture was very individualistic. There was little interaction between
teaching and research, and not much ability to rethink and reform teaching
traditions and conventions. The career management for researchers and
doctoral candidates was insufficient, and the numerous start-up companies
rarely grew or even less operated internationally. TaiK also needed yet to
become a strategic asset in Aalto, and had to develop its abilities to fully
benefit from the Aalto-platform. Furthermore, there had been much
skepticism toward Aalto especially in the more art-oriented departments of
TaiK.
2.2.2 The Purpose and Goals of Aalto
University
“The University‟s role is to advance independent research
and scientific and artistic education. In the University, there
is a freedom of science and education. The University
operates in fields of technology, economics, and industrial
arts. The responsibility for research and teaching in these
fields are in the respective autonomous schools, which are
based on the founding schools‟ entities and brands.
The national task of the University is to support Finland‟s
success by means of high level research and teaching. The
University supports in a positive way the Finnish society, its
21 Research Site: Aalto University
technology, economy, culture and international interest
toward it.“
-Translated from the Sailas Report (2007)
The Finnish system of higher education as a whole is facing new demands
and challenges (Aalto University 2008). There is an increasing competition
from top universities in the West and new successes in the East. The
increased competition contributes to increased resource requirements to
remain competitive. The world is becoming multi-disciplinary, with
research problems more complex and multi-faceted, and new skills
required from students, but current research and teaching mostly focused
around single disciplines. The old university model still in use during the
planning of Aalto University also considered universities to be a part of the
government bureaucracy, contributing to a lack of dynamism.
Aalto University was meant to be a national level response to these
demands with a task of supporting Finland‘s success. The university would
contribute by ―coaching skillful and responsible experts, leaders,
entrepreneurs and artists to renew and lead the society, doing research that
aims for breakthroughs on chosen fields of science and art, and being in
active international interaction with the society and producing with the
means of science and art proactive perspectives and solutions to social
challenges‖ (ibid.).
The early Aalto planners set their goals accordingly. Aalto should focus
on selected spear heads in research on a world class level, encourage risk
taking in potential breakthrough initiatives, and provide better framework
and infrastructure in addition to long term funding for research. The focus
of recruiting and evaluations was set to be in quality of research and
teaching, and the university should provide better opportunities for
innovation through cross-disciplinary research. Culturally a major goal was
the creation of an inspiring learning centric culture with an increased
commitment to teaching and learning from both staff and students (ibid.).
The Aalto planners believed that the university could reach its goals by
providing clear career paths, providing mentoring and support on career
development to all faculty and staff, offering competitive salary and
incentive systems, encouraging open communication and involvement,
increasing international co-operation, supporting and rewarding excellence,
and providing increased resources (ibid.).
History 22
2.2.3 Timespan
An important context of the Aalto transformation is the timespan of the
project, consisting of strongly distinctive phases between which there have
been significant discontinuities as the makers, owners and nature of the
project have abruptly changed. The timespan is illustrated in Figure 2
below, with three major phases: 1) Preparation -> 9/2007, 2) Planning
9/2007-3/2009, and 3) Implementation 3/2009 ->.
Preparation. It is impossible to announce any certain point of time when
the Aalto University project could be said to have begun. The possibilities of
a private university for gathering private funding were discussed by TKK
and HSE top management already in the 1990s. The President of TaiK Yrjö
Sotamaa introduced the idea of a merger of TaiK with TKK and HSE in his
opening speech of academic year 2005, and the Ministry of Education had
ordered several reports to investigate possibilities for reforming the higher
education system, the most significant of which were the reports by
Jääskinen and Rantanen (2007) and Sailas et al (2007). The 137-page Sailas
report that was released in February 2007 became the backbone for all
successive planning of the Aalto project. The Sailas report was important
not only because of the contents of the actual paper, but also because of the
composition of the so called Sailas group that produced the report. All
members were high-profile individuals, and the group included the
presidents of TKK, HSE and TaiK.
1/2010 4/2009 8/2008 9/2007
Project Director and Steering Committee appointed by Ministry of Education
Board appointed, Aalto Transformation Team assembled
New President starts TKK, HSE and TaiK merge into Aalto University
Sailas report Intense lobbying Political go-ahead
Negotiations and planning efforts between TKK, HSE and TaiK Fund rising starts New Universities Act
Intense planning of basic organizational structure and processes Strategy preparation Theme groups Search and appointment of first President
Aalto Transformation Team disbanded Recruitment of vice-presidents and directors Strategy process
Restructuring of administration Restructuring of TKK into 4 schools Appointment of new deans New career system Central administration in place
PREPARATION PLANNING IMPLEMENTATION
Figure 2: Timespan of Aalto Project
23 Research Site: Aalto University
Planning. Soon after the Sailas report was released, the government
announced that the new university would be realized before the next
general parliamentary elections in spring 2011 and that the Ministry of
Education would coordinate the project. The Ministry of Education
announced that the project would be based on the Sailas report, and
appointed a project leader and a steering committee in September 2007.
The project had essentially a shared ownership between the Ministry of
Education, the Federation of Finnish Industries and the merging
universities. Also the leadership structure was complex with the steering
committee, a project management team consisting of the project director
appointed by the ministry and project managers from the three universities,
and a troika of three standing presidents, all making their own decisions. A
major issue was the renewal of Universities Act in Finland, and the
legislation process was closely coordinated with the progress of Aalto.
The planning phase entered a much more focused and effective era in
August 2008 when the new Board of the Aalto University was appointed,
and the Aalto Transformation Team (A8) was formed to take control of the
practical preparations under the supervision of the Board. The A8 then
created ―theme groups‖ consisting of hundreds of volunteers across the
academic community (including students) to take part in the planning
effort and, perhaps most importantly, to facilitate communication and
commitment. As the Board was a clear legitimate owner for the project, the
Ministry of Education and the Federation of Finnish Industries retreated
much to the background, and the Board and the A8 claimed the strategic
leadership of the project. However, the Federation of Finnish Industries
retained responsibility for gathering the private funding required by the
university.
Implementation. Because the Board and A8 had avoided making
strategic decisions that would bind the hands of the operative management
of the university, most importantly the President, the actual
implementation phase of the project can be considered to have begun in
April 2009 when the first President started at her post. The first focus of the
implementation phase was recruitment of key leaders and budget and
strategy preparation issues, with the new management eventually reaching
limited operational capability in late 2009, just before the responsibilities
of the old universities were transferred to Aalto that started as a university
1.1.2010. It took until summer 2010 that the Aalto central management had
completely emerged and reached full operational capacity.
Aalto University in Numbers 24
2.3 Aalto University in Numbers
Some key figures of Aalto University as of year 2010 can be found in Table
1. For consistency the abbreviations TKK, HSE and TaiK are used to refer to
the schools, even though the formal 2010 names would be Aalto School of
Science and Technology for TKK, Aalto School of Economics for HSE and
Aalto School of Art and Design for TaiK. Furthermore, since 2011 TKK has
been split into four separate schools.
TKK HSE TaiK Aalto
Bachelors‘ theses 688 357 101 1146
Masters‘ theses 1887 246 179 2312
Doctoral dissertations 153 19 12 184
Bachelor- and Master
students
10792 3443 1822 16057
Doctoral students 2933 280 246 3459
Total staff 3187 524 402 4685
Professors 234 58 46 338
Space used on campus
(m2)
250 000 30 000 40 000 320 000
Source: Aalto University
Table 1: Key figures of Aalto University (2010)
25 Theoretical Framework
3. Theoretical Framework
3.1 Overview
The central theme of this thesis is describing the effects of organizational
inertia in a strategic public university merger. That said, we obviously have
to know something about universities. But above all, we have to know about
inertia. Despite a wide range of research about inertia and change, and the
at least partial integration of inertia to practically all relevant organizational
theories, the whole concept of inertia remains somewhat ambiguous.
Nevertheless, an effort must be made here to answer the question ―what
is organizational inertia‖. The concept of inertia is opened up by using the
framework of organizational ecologists as a starting point, but not limiting
the analysis to their ideas. In practice this is done by splitting the concept of
inertia to its component parts, as originally defined by Hannan and
Freeman (1977) and supplemented by the work of Hannan, Pólos and
Carroll (2003). The division of chapter 3.2 to subchapters is based on this
framework. Relevant organizational and sociological theories and concepts
are then discussed under the subchapter that draws most from the
particular theory, such as institutional theory under chapter 3.2.4 ‗Internal
Institutional constraints‘ and the concept of power under chapter 3.2.3
‗Internal political constraints‘.
The idea here is not to claim that this would be the only suitable division
of the topic, or that it would cover all aspects of inertia. However, my belief
is that the division is illustrative enough for approaching a complex subject
and that at least all the most important aspects of inertia are covered. It also
makes it possible to gather together the maximum number of aspects of
inertia without using the limited space and time available for describing in
detail such aspects of extensive theories that are not relevant for the scope
of this work.
Even though the theoretical framework is presented here in the
beginning of the thesis, the construction of the emergent theoretical
framework has in practice advanced iteratively on par with the developing
empirical evidence as a grounded theory approach.
Overview 26
Change and Universities
Returning to the main research question, the role of organizational inertia
during the formation of a university, it becomes relevant to consider how
applicable the reviewed theory is to universities. Actually it turns out that if
any of my references have commented on the applicability of their research
to either private or non-profit organizations, they have claimed that if their
research is applicable anywhere, then in non-profit organizations.
University is clearly the most commonly cited example of organizational
type that faces the problems of inertia. Therefore it should be safe to
assume that if the theoretical framework presented here is feasible
anywhere, then it is feasible for analyzing universities. Some examples
follow.
Mintzberg expresses the matter quite bluntly (2009: 387) and suggests
that no great turnarounds should be expected in professional organizations
such as hospitals or universities, but instead continuous and incremental
learning-based renewal of actual operations takes place all over the
organization.
Aldrich gives universities as an example of loosely coupled organizations
that maintain a façade of pretending to follow institutionalized rules (1999:
51), an example repeated also by Scott (2003: 303), who continues (ibid:
285) that universities adopt to conflicting demands by creating appropriate
programs and offices at the administrative level that create the required
reports, but then decoupling these offices from the operational level.
Acknowledging the concept of organized anarchy by Cohen and March and
Olsen (1972), Scott also suggests that the task of university presidents is
especially problematic, and offers solutions for academic leaders to
―maintain their sanity and, sometimes, make a difference in the decisions
made‖ by (Scott 2003: 306):
Carefully timing issue creation
Being sensitive to shifting interests and involvement of participants
Recognizing the status and power implications of choice situations
Abandoning initiatives that have become hopelessly entangled with
other, originally unrelated problems
Realizing that the planning function is largely symbolic and chiefly
provides excuses for interaction
Also Hannan and Freeman (1984: 78, 113) underline the interdependencies
of power, internal politics and resource distribution, particularly in
university context. They describe the modern university as a ―holding
27 Theoretical Framework
company‖ of different disciplines and departments. The resourcing of the
disciplines fluctuates along trends and fashions, and the political costs for
creating or disbanding organizational units is extremely high. This requires
long time resourcing and recruitment planning, which creates continuous
income transfers from successful to unsuccessful units. Therefore the best
units are under-resourced and understaffed, while the poor-performing
units are over-resourced and overstaffed.
Cohen, March and Olsen (1972: 11-13) claim that ―if [their garbage can]
model [of organized anarchy] is applicable anywhere, then in universities‖.
They find that university decision making frequently does not solve
problems and any choices are often made through flight (moving the
decision somewhere else to be made) or through oversight (making a
decision because it is possible with little knowledge about the decision‘s
implications). University decision makers often move around the
organization offering their standard solutions to any problems they
encounter, and also problems circulate around the organization through a
series of decision making opportunities, where the same decision makers
often meet the same problems over and over again. Also the most important
choices, such as board meetings generally or strategy decisions particularly
are the least likely to solve problems in a university.
Cohen, March and Olsen continue (ibid.) that a university organization is
likely to become very bureaucratic for a number of main reasons. First,
there is little slack of resources and much heterogeneity, which create a
need for strict controls. Slack would be a substitute for technical and value
homogeneity by providing resource buffers between parts of organization.
Second, high administrative power or high interrelation of problems will
lead to a hierarchical decision structure. Furthermore, a key issue is the
energy distribution of participants within vs. outside the organization. The
decision makers have alternative opportunities for investing their time, and
the stronger the relative outside demand on important people in the
organization is, the less time they will spend within the organization and
the more exit opportunities they have.
The examples suggest that organizational inertia has real explaining
power as a concept when considering a university transformation.
Organizational Inertia 28
3.2 Organizational Inertia
Perhaps the most influential description of organizational inertia has been
given by Michael Hannan and John Freeman (1977, 1984).
They argue that even though organizations can change their structure
and strategy, such a change is a rare event that cannot be well coordinated
and timed with environmental changes favoring a particular model of
behavior (1984: 66). This difficulty in changing core characteristics of
organizations is a result of ecological selection among organizations (ibid:
67).
According to Hannan and Freeman, creating an organization is an
expensive way for accomplishing a specific task, because the maintenance
of the organization itself consumes excessive resources. Organizations also
have a tendency to develop into ends in themself as well as gather such
resources and create a complex structure that are not necessary for fulfilling
the purposes the organization exists for (ibid: 73).
However, Hannan and Freeman claim (ibid: 74-77) that organizations
are still necessary for their two most important positive characteristics,
which are
1) Reliability of performance
2) Accountability
Inability to fulfill these universal stakeholder expectations hinders an
organization‘s chances for gathering resources during its emergence, and
later for attracting additional resources and encouraging participant
commitment. The expectations can be met through elaborate
institutionalized and standardized routines which can be reproduced
without error from one day to the next. But the institutionalization is a two-
edged sword: Even though it makes the reproduction of the unquestioned
structure easy, at the same time the institutionalization makes the structure
difficult to change. Any attempted change becomes a political question of
principles instead of being simply a technical problem.
Thus, according to Hannan and Freeman, the social selection processes
favor organizations with high levels of reliability of performance and
accountability, and reliability and accountability in turn depend on a
capacity to reproduce a structure of high fidelity (ibid: 245), which
contributes to inertia. Therefore most successful (large, old) organizations
are likely to have high inertia.
A number of internal and external factors contributing to inertia can be
identified (Hannan and Freeman 1977, Hannan, Pólós and Carroll 2003).
29 Theoretical Framework
One possible illustrative list for structuring the concept of inertia is as
follows:
1. Sunk costs 2. Information constraints 3. Internal political constraints 4. Internal institutional constraints 5. Barriers of entry/exit 6. External legitimacy constraints 7. Limitations of collective rationality 8. Limitations of learning
These factors will be discussed in the following chapters.
3.2.1 Sunk Costs
Sunk costs are retrospective (past) costs that have already been incurred
and cannot be recovered. For instance organization‘s investment in plant,
equipment and specialized personnel constitute assets that are not easily
transferable to other tasks or functions, thus constraining adaptation
options. For instance Aldrich (1999: 30) writes that organization‘s
documentation, buildings and systems guide the organizational memory.
Scott (2003: 317) continues that ―elaborate and almost invisible controls
are embedded in the organizational structure itself‖, namely in the layout of
offices, functions, rules and policies.
Also early recruitment decisions concerning which people to hire, how
their jobs are structured, and how new members interact, may have a long-
lasting effect on organization (Aldrich 1999: 119). DiTomaso et al. (2007)
found that characteristics individuals hold as salient components of their
self-identities become favorable bases for the evaluation of others, whereas
dissimilar characteristics are viewed less favorably. Founders and managers
tend to recruit people similar to themselves, and organizations tend to
attract people who believe that the organizational members are similar to
themself. When the reality of work is revealed, those are the most likely to
leave who have misinterpreted the work environment (and who in reality
are not similar to people around them). Over time these processes create
psychologically homogenous workgroups, even though in emerging
organizations with members totally engrossed in their tasks, they may be
willing to tolerate dissimilar others thus sustaining a potential source of
organizational variability (Aldrich 1999: 122-125). Furthermore, initial
junior idiosyncratic jobs created in emerging organizations can have
significant effect on the future organization (ibid: 130). A position and work
Organizational Inertia 30
description customized for and by a particular individual can survive in the
organization long after it has lost its original purpose.
Colombo and Delmastro (2002) have analyzed a large sample of
manufacturing plants observed from 1975 to 1996 and found evidence that
the presence of sunk costs figures prominently in explaining structural
inertia of business organizations. Rauch (1993) argues that the sunk costs
resulting from the operation of many firms at a particular site creates a
first-mover disadvantage that can prevent relocation. Ichniowski and Shaw
(1995) expand the traditional concept of sunk costs further into individual
level. They show that in addition to inertia caused by company level sunk
costs resulting from adaptation of advanced human resource practices, also
individual level sunk costs of workers‘ personal investment in task-specific
and firm-specific skills to master work routines creates a major inertial
force opposing change.
3.2.2 Information Constraints
The situational awareness of decision makers is seldom perfect. On the
contrary, the information available for decision making is normally severely
limited, which creates delays and often limits the scope of decision making
to issues which are believed to be understood with reasonable accuracy.
Some common information related issues in organizations are
misunderstandings and communication failures, selective gathering of
information, selective use of information, selective activation of
organizational members, and information as power.
One example of consequences of information constraints is the ―liability
of newness‖ of emerging organizations described by Hannan and Freeman
(1984). New organizations are vulnerable because their members are
strangers and withhold crucial information from one another. Efficient
operations become possible only after the trust has been established
between members. Aldrich (1999: 96) continues that fatigue, which is
common among key decision makers during critical times, contributes to
the use of cognitive shortcuts such as optimism, overconfidence and
selective use of information.
Another example is the goal displacement and sub-goal formation
introduced by March and Simon (1958: 150-158). Groups within
organizations can become the primary groups for their members, and since
goals are divided and factored among individuals and groups, goal
displacement is encouraged by selective perception and attention processes
among individuals, the selective content of in-group communication, and
31 Theoretical Framework
the selective exposure to information occasioned by the division of labor
within the larger organization. Goals assigned to individuals and groups as
means easily come to be viewed as ends in themself.
Cohen, March and Simon investigate in their infamous ―garbage can
model of organizational choice‖ (1972) how organizations can make choices
without consistent, shared goals, and how members are activated, i.e. how
attention is directed toward, or away from, a decision. Understanding
attention patterns is important, since not everyone is attending everything
all of the time. They claim that variations in behavior in organized
anarchies (the model of which describes a portion of almost any
organization‘s activities) are largely due who is attending to what.
In many cases the processes how an organization assesses its
environment may have even greater influence on change than the
environment itself. The problem of bounded rationality surfaces when the
amount of information available for decision making grows so large, that
the mechanisms of focusing attention and refining information become
more important than the concept of choice (Scott 2003). Some information
will turn influential only because it is collected and thus readily available to
support decision making. Importantly the strategies in use (Daft and Weick,
1984) and organizational structures in place, especially information-
processing structures (Thomas, Shankster, and Mathieu, 1994), play
significant roles in guiding interpretation. According to Thomas and
McDaniel (1990), the organization‘s strategy amounts to a statement of
intention that influences top management‘s perceptions of key issues, and
tightens top management‘s interpretive focus (Daft and Weick, 1984).
Another human limitation for organizations making sense of their
environments is the process of enactment. The organizational actors,
particularly top management, interpret their environment subjectively and
create a collective ―rational‖ explanation for challenges and phenomena
they face and thus enact the environment around them. They can also
actively alter anything they focus their attention to, thus producing e.g. self-
fulfilling prophecies (Scott 2003)). Also here the strategy in use is an
important element in the institution‘s enacted environment (Weick 1979).
Furthermore, there is the common fallacy of retrospective sense-
making. People are apt to give logical explanation for their actions after the
act, although in reality the action often precedes interpretation and the
interpretation creates a context for action (Aldrich 1999). It should be noted
here as well, that the retrospective sense-making also creates significant
challenges for research trying to figure out, why did people act as they did.
Organizational Inertia 32 Most information biases apply both internally and externally in
organizations. As Hannan and Freeman (1977) note, gathering information
from critical external environments is especially expensive during turbulent
times, when the information would be most valuable. Also the type of
professionals the organization uses influences what kind of information
1) the organization is likely to gather
2) the organization is capable of processing
3) the organization is capable of using
Scott (2003: 56) concludes the discussion about limitations in
processing information stating that an individual is incapable to anything
even close to rational decision making, because the enormity of possibilities
is incomprehensible. Therefore the choice is made among ―given‖
alternatives.
In addition to the numerous intrinsic difficulties organizations have in
information gathering, processing and distributing, also a more blunt force
often hinders the flow of information. Because information is power,
deliberate distortions of meanings and withholding of information are also
strategies to gain power (Aldrich 1999: 153). Scott puts it nicely (2003:
291):
Effective participation is not closely related to rank in the
formal hierarchy of the organization. Power is assumed to
pass down from the pinnacle. This happens, but only in very
simple organizations – the peacetime drill of the National
Guard or a troop of Boy Scouts moving out on Saturday
maneuvers. Elsewhere the decision will require information.
Some power will then pass on to the person or persons who
have this information. If this knowledge is highly particular
to themself then their power becomes very great.
The effect of power games and politics on inertia is discussed in the next
chapter.
3.2.3 Internal Political Constraints
Variations are generated within organizations as people cope with problems
involving the reproduction of their organizations from one day to the next
(Aldrich 1999: 54). This reproduction depends on participants continually
negotiating a shared understanding of what they are doing. However,
dominant groups and coalitions may constrain opportunities for variation
to prevent challenges to their power and privilege.
33 Theoretical Framework A dominant coalition includes all the groups, whose interests have to be
taken into account while making decisions (Scott: 2003). The groups may
agree to compensate each other to make others support their cause, and
thus advance causes that are irrelevant or even harmful for themselves for
tactical reasons. The more complex the environment and the more
uncertainty there is, the larger the dominant coalition is likely to become.
Tilly (1998) writes that different status-based groups within the
organization dynamically attempt to preserve and expand their advantages
by limiting access to others outside their status group. Groups excluded
from participation will then tend to devise means to usurp status
monopolies, either by directly challenging a superordinate‘s advantages or
by monopolizing other resources (Parkin 1979).
Scott (2003) emphasizes the significance of resource distribution as an
indicator of power and ―true‖ goals of management. He suggests that in
differentiated and loosely coupled systems such as universities the balance
of power between units is not reflected as much in direct attempts to
influence the goals of the organization as a whole, but instead in attempts to
gain access to disproportionate share of resources. The more powerful units
are also better able to influence the resource allocation principles for their
own favor. Thus the ―golden rule of power‖ applies: ―He, who has the gold,
makes the rules.‖
The labor process school in the sociology of work has emphasized the
relative power of actors—owners, managers, and different groups of
workers—to influence the technical and social organization of work (e.g.,
Edwards 1979, Hodson 2001, Vallas 1993). Another approach advocated
e.g. by Scott (2003: 133) is to consider two possible conflicting roles
available for organizational participants. The users need to learn only the
organizational knowledge serving their own interests, and for them the
organization has value mostly as a resource. However, the supporters need
to learn their part of the organizational knowledge that fully reproduces the
organization‘s form, and for them the organization itself and its cause are
valuable. Especially in new organizations growth by adding members may
increase the tension between user and supporter orientations, as the
supporters that have likely created the organization are suddenly
overwhelmed by the normally more abundant user types.
Stainback, Tomaskovic-Devey and Skaggs (2010) see inertia as built
around cognitive, interactional, and institutional processes that create and
reinforce power and status distinctions and expectations. The relative
power of internal workplace constituencies (e.g. dominant managerial
coalition opposed by professional staff) also influences change in divisions
Organizational Inertia 34
of labor, human resource practice, and the allocation of organizational
resources.
Adler and Borys (1996) consider the effect of politics on implementation
of new technology (methodology or processes) in organizations. In worst
case the introduction of a new technology can have no determinate effects
on organization, because the change is primarily an opportunity for various
social forces to play out another round in their rivalry.
Hannan and Freeman (1977), bring together the key political issues causing
inertia. Any alteration of organizational structure disturbs the political
equilibrium and causes a redistribution of the limited resources.
Furthermore, even if the reorganization is considered as beneficial as a
whole, most benefits will be shared and are realized only in the long run. On
the contrary, most disadvantages of the reorganization normally affect only
a part of the organization, and are realized immediately. Thus it should not
be surprising that political resistance to change exists.
Mintzberg (2009: 273) concludes that ―it hardly makes sense to describe
strategy formation as a process devoid of power and politics.‖ He continues
that the significance of politics is especially great
a) during periods of major change, when significant shifts in power
relationships inevitably occur and so conflicts arise
b) in large, mature organizations
c) in complex, highly decentralized organizations of experts (such
as e.g. universities), where many actors have the power and
inclination to further their own interests
d) during periods of blockade, when strategic change is stopped
e) during periods of flux, when organizations are unable to
establish any clear direction and so decision making tends to
become a free-for-all
35 Theoretical Framework
As examples of different possible political games played in organizations,
Mintzberg (2009: 245-246) gives the following:
Insurgency game: Usually played to resist authority, or else to effect change in the organization; is usually played by ‘lower participants’, those who feel the greatest weight of formal authority.
Counterinsurgency game: Played by those in authority who fight back with political means, perhaps legitimate ones as well (such as excommunication in the church)
Sponsorship game: Played to build power base, in this case by using superiors; individual attaches self to someone with more status, professing loyalty in return for power.
Alliance-building game: Played among peers – often line managers, sometimes experts – who negotiate implicit contracts of support for each other in order to build power bases to advance selves in the organization.
Empire-building game: Played by line managers, in particular, to build power bases, not cooperatively with peers but individually with subordinates.
Budgeting game: Played overtly and with rather clearly defined rules to build power base; similar to the last game, but less divisive, since prize is resources, not positions or units per se, at least not those of rivals.
Expertise game: Non-sanctioned use of expertise to build power base, either by flaunting it or by feigning it; true experts play by exploiting technical skills and knowledge, emphasizing the uniqueness, criticality, and irreplaceability of the expertise, also by keeping knowledge to selves; non-experts play by attempting to have their work viewed as expert, ideally to have it declared professional so that they alone can control it.
Lording game: Played to build power base by ‘lording’ legitimate power over those without it or with less of it (i.e., using legitimate power in illegitimate ways); manager can lord formal authority over subordinate or public servant over citizen, etc.
Line versus staff game: A game of sibling-type rivalry, played not just to enhance personal power but to defeat a rival; pits line managers with formal decision-making authority against staff advisers with specialized expertise; each side tends to exploit legitimate power in illegitimate ways.
Rival camps game: Again played to defeat a rival; typically occurs when alliance or empire-building games result in two major power blocks; can be most divisive game of all; conflict can be between units (e.g. between marketing and production in manufacturing firm), between rival personalities, or between two competing missions (as in prisons split by conflict between some people who favor custody and others who favor rehabilitation of the prisoners).
Strategic candidates game: Played to effect change in an organization; individuals or groups seek to promote through political means their own favored changes of a strategic nature.
Whistle-blowing game: A typically brief and simple game, also played to effect organizational change; privileged information is used by an insider, usually a lower participant, to ‘blow the whistle’ to an influential outsider on questionable or illegal behavior by the organization.
Young Turks game: Played for the highest stakes of all; a small group of ‘young Turks,’ close to but not at the center of power, seeks to reorient organization’s basic strategy, displace a major body of its expertise, replace its culture or rid it of its leadership.
Organizational Inertia 36
3.2.4 Internal Institutional Constraints
Opportunities to construct new worlds are limited because of
the historical accumulation represented by existing
organizations, populations, and social structures. When the
social world becomes a taken for granted reality, people
often decline to challenge it. Evolutionary theory thus posits
a world where people are intendedly rational, can‟t always
get what they want, and certainly don‟t always get what they
need.
Howard Aldrich (1999: 41)
History, established culture, routines and structures are strong
determinants for an organization‘s ability to cope with change. In many
cases a strong heritage works to anchor organization to its recognized and
respected past.
A distinctive culture is something that an organization has, but it is also
something that an organization is. On one hand the culture can be
manipulated, on the other hand the culture affects everything that takes
place in an organization. A strong culture has also its downsides, because as
it attracts the like-minded, at the same time it also repels those who think
differently. Homogeneity improves an organization‘s controllability but
simultaneously impairs its problem solving capabilities. Aldrich (1999)
writes that the selective refining of information emphasizes the views
supported by the majority, and gradually the heterogeneity of organization
is likely to diminish. The social reality created by early generations limits
the ability of later actors to interpret their environment.
As a starting point, Hannan and Freeman (1977) suggest two main
causalities how normatively agreed routines and tasks contribute to inertia:
1) Normative approval grants justification and organizing principle to
forces that wish to oppose change by providing a common cause
above mere self-interest.
2) Normatively agreed processes and behavior limit a serious
consideration of different options to only a few alternatives.
Concerning normativity, a unique and important phase in an organization‘s
development is the period of founding. Scott (2003: 70) writes that even
the processes of decision making themselves, through which the structure
of the organization is altered, shape the character of the organization.
Aldrich (1999: 91-92) continues that much of the improvisation in shaping
37 Theoretical Framework
an organization is limited to the period of founding, and even then the
choice possibilities are perceived as limited because most managers simply
try to reproduce normatively recognized structures.
Any routines dating back to the period of founding are especially
resilient to change because they are associated with the strong emotions of
organization‘s early development. The excitement and intensity of the
period of founding also drive the key personnel to carry a tremendous
burden of work creating heroic stories difficult to match later. The
idiosyncracy of actors to existing routines occurs not only for organizational
reasons but also because the routines ease the lives of participants (ibid.).
After the routines have been in place long enough to be institutionalized,
people no longer do something because it is the normatively ―correct‖ or
rationally ―the best‖ thing to do, but because it is the only thing to do (ibid:
51).
Barnett and Burgelman (1996) emphasize the significance of the period
of founding for the organization‘s strategy making process. In the beginning
the top management sets a structural framework for all activities, the most
significant of which are the resource allocation principles. Resource
allocation is a strong indicator of the true goals and motives of an
organization, regardless of strategic rhetoric. And when the resource
allocation principles have once been set, they are very difficult to change.
Another interesting dimension of institutional limitations is the
legitimacy of leadership. During a major organizational crisis or turnaround
the significance of charismatic leadership may be great. However, as time
goes by even charisma can be routinized and institutionalized, i.e. encoded
into organizational structures (Barley and Kunda 1992, Aldrich 1999).
When power is legitimate, it is also normatively constrained – the rules of
authority limit as well how the power cannot be used (Scott 2003: 314).
Furthermore, legitimate power is normally endorsed power, meaning that
subordinates collectively enforce limitations to the use of power. Thus any
change proposed by management can be challenged, delayed and even
stopped by powerful subgroups within the organization, should it be viewed
as illegitimate. According to Clemens and Cook (1999: 19) this means that
when political entrepreneurs seek to transform the overarching institutions,
they face high demands to keep their calls for change within accepted
models, and the most ambitious innovators may well cloak their efforts for
change in appeals to restore tradition. Consequently, as written by Riker
(1995: 121), ―no institution is created de novo‖.
On the other hand, the power of a legitimate order is great indeed. When
a person is presented with a demand in a situation that has all the earmarks
Organizational Inertia 38
of legitimacy, he does not usually ask himself what he would like to do.
Instead, the central question he confronts is what he must do or should do
– it becomes all about his obligations rather than his preferences (Scott
2003: 314). Because of this great power of legitimacy, the most intense
struggles within organizations develop over who will have the power to
shape rules and norms (Aldrich 1999: 51).
Scott (2003: 181) notes also that a particular problem of leadership
exists as an organization moves from one stage to another during its life
cycle. According to Scott, each stage requires different type of leadership,
and the solutions for each stage become the problems of the next. Each
stage ends in a crisis that the organization has to survive to enter the next
stage, but normally the solutions the management has to offer for solving
the crisis are the solutions of the past.
Stainback, Tomaskovic-Devey and Skaggs (2010) emphasize the
cognitive foundations of institutions and have reviewed extensively
organizational theory to explain processes causing inequality in
organizations. They find a key feature of formal organizations to be that
they are designed to outlive their participants. Organizational routines,
status distinctions, and divisions of labor become the taken-for-granted
framework for habitual action, and the formalization of the rights and
privileges attached to the hierarchy of jobs contribute to maintaining the
status quo. The division of labor typically codifies workplace inequality
because it determines the scope and possibility for upward mobility,
structures the form and content of social interaction, and defines
compensation structures. Stainback et al. (ibid.) conclude that in the
presence of status or class inequalities, all these factors are likely to
reinforce the cognitive foundations of organizational inertia.
Another interesting recent study by Willer, Kuwabara and Macy (2009)
focuses on the enforcement of norms, and more exactly on the false
enforcement of unpopular norms. Many such unpopular norms exist, that
people compel each other to do things that they privately disapprove. Peer
sanctioning is a ready explanation for why people conform to unpopular
norms, but the question why people enforce unpopular norms is more
interesting. Willer et al. (ibid.) suggest that people enforce unpopular
norms to show that they comply out of genuine conviction and not because
of social pressure. The results demonstrate the potential for a vicious cycle
in which perceived pressures to conform to and falsely enforce an
unpopular norm reinforce one another.
39 Theoretical Framework
3.2.5 Barriers of Entry/Exit
In addition to internal factors contributing to inertia, organizations are also
susceptible to inertial pressures from their environment.
An obvious example are the barriers of entry and exit limiting an
organization‘s chances for diversification into new markets or areas of
operation, or its possibilities for abandoning established activities. The
significance of entry barriers has been covered extensively in the
organizational literature (see for example Porter 1980, Bain 1968 or
Ferguson 1974). A readily available university related example would be a
state licensed monopoly position for providing certain types of education.
However, in the context of inertia the exit barriers are perhaps even more
interesting (Hannan and Freeman 1977), as there are numerous instances
of political and legal limitations that prevent organizations from
abandoning certain operations. For a university, for instance, the political
and fiscal barrier for exiting bachelor level education might be very high. All
such constraints on entry and exit limit the breadth of adaptation
possibilities.
Research discussing directly the impact of mobility barriers on inertia is
not very excessive. One example are the findings of Barnett and Sorenson
(2002), who suggest that competition triggers organizational learning,
which in turn intensifies competition and this cycle (the so called ―red
queen model‖) leads some organizations to grow and evolve quickly and
establish strong barriers to entry while limiting the choice available for the
organizations involved. Fiegenbaum and Thomas (1993) report a low level
of mobility between different strategic groups in conditions of high inertia
and mobility barriers. Furthermore, Munene (1995) has studied innovation
in private sector and found that there were significantly less entrepreneurial
innovations because the institutional environment was characterized by
entry as well as exit barriers. These included dependency and isolation from
foreign technology, political patronage and a high level of moral hazard.
These barriers made innovations a costly and expensive venture into which
organizations entered reluctantly so that the bulk of innovations were of the
type that consolidated existing ventures or prevented their demise.
Organizational Inertia 40
3.2.6 External Legitimacy Constraints
The concepts of legitimacy and institutionalized rules play a major part not
only in the internal but also in the external constraints to organizational
change. All the legitimacy that an organization has been able to gather
constitutes an important resource that the organization can utilize to
manipulate its environment. Thus any change diminishing the
organization‘s legitimacy causes significant costs (Hannan and Freeman
1977). The key success factor for private sector organizations is efficiency,
but on the public sector the success is largely based on isomorphism to
institutionally accepted behavior (Hannan and Freeman 1984). Therefore
any change in the institutionalized rules may be even fatal for public sector
organizations that cannot credibly show that they are conforming to the
new rules.
Meyer and Rowan (1977) discuss the character of legitimacy constraints
in depth in their report ―Institutionalized Organization – Formal Structure
as Myth and Ceremony‖.
Meyer and Rowan suggest that modern societies are filled with
rationalized bureaucracies for two main reasons (ibid: 345):
1) Rational networks become increasingly complex as societies
modernize.
2) Modern societies are filled with institutional rules which function as
myths depicting various formal structures as rational means to the
attainment of desirable ends.
Perhaps the most influential of these myths in our society is the myth of
rationality that has a vast organizing potential after the myth has become
institutionalized (ibid: 346). The pressure to establish certain structures
and practices may arise from such sources as the state, public opinion, or
professional organizations (Stainback et al. 2010).
Isomorphic changes may also arise from mimetic processes in which
organizations facing uncertainty alter or adopt behaviors and structural
forms that are similar to existing organizations within their field (DiMaggio
and Powell 1983). Organizations tend to model themselves after other
similar organizations they perceive as legitimate, but the change can be
incremental or even unintentional if following environmental shifts such as
variation in labor force supply and demand (Stainback et al. 2010).
An organization can demonstrate its social fitness by incorporating
structures with high ceremonial value, such as those reflecting the latest
expert thinking or those with the most prestige. Also units within the
41 Theoretical Framework
organization often use ceremonial assessments as accounts of their
productive value to the organization, which makes the ceremonially fittest
units also the most powerful internally (Meyer and Rowan 1977: 351).
However, organizations are not merely at the mercy of the externally
imposed institutional contexts, but they can play active roles in shaping
those contexts. Many organizations actively seek charters from authorities
and manage to institutionalize their goals and structures in the rules
enforced by the authorities (Pfeffer and Salancik 1978). This external
influence can take place in different scenes (Meyer and Rowan 1977: 348):
1) Powerful organizations force their immediate relational networks to
adapt to their structures and relations.
2) Powerful organizations attempt to build their goals directly into
society as institutionalized rules.
A problem for organizations trying to follow the rules arises because the
myths are generated in different parts of the environment, and thus may
conflict with one another. Furthermore, a conflict is likely to arise between
categorical rules and efficiency, because institutional rules are very general.
Therefore organizations are faced with four ―partial‖ solutions for handling
the inconsistencies between institutionalized myths and efficiency (ibid:
355):
1) Neglecting myths: However, organization that neglects
ceremonial requirements and portrays itself as efficient may be
unsuccessful in documenting its efficiency.
2) Conforming to institutional requirements by cutting out
external relations: However, institutional organizations must not
only conform to myths but must also maintain the appearance that
the myths actually work.
3) Cynically acknowledging the inconsistence between
structure and work requirements: However, this denies the
myths and illegitimates the organization.
4) Promising reform: However, defining the valid structure lying in
the future makes the current structure illegitimate.
Because all these solutions have significant disadvantages, Meyer and
Rowan (1977: 357) offer two mechanisms to attempt a complete solution,
namely loose coupling of formal structures and actual work activities,
and the logic of confidence and good faith.
Organizational Inertia 42 To achieve a loosely coupled state institutionalized organizations protect
their formal structures from evaluation on the basis of technical
performance by emphasizing the ―professionalism‖ of organization, such as
the ―academic freedom‖ in a university. Inspection, evaluation and control
of activities are minimized, and coordination, interdependence and mutual
adjustments among structural units are handled informally. Ambiguous
goals and categorical ends are substituted for technical ends, for instance
schools produce students, not learning. Integration is avoided,
implementation is neglected and inspection and evaluation are
ceremonialized. This effort is supported by making human relations very
important. The ability to get along with other people is highly valued, which
contributes to ability to coordinate things in violation of the rules (ibid.,
Hannan and Freeman 1984, Scott 2003).
The key concept of the logic of confidence and good faith is the
maintenance of face. Assuring that individual participants maintain face
sustains confidence in the organization, and ultimately reinforces
confidence in the myths that rationalize the organization‘s existence. This
can be accomplished through avoidance, discretion and overlooking (Meyer
and Rowan 1977: 358).
March and Simon (1958) wrote that delegation, professionalization, goal
ambiguity, the elimination of output data and maintenance of face are all
mechanisms for absorbing uncertainty while preserving the formal
structure. Effectively absorbing uncertainty and maintaining confidence
requires people to assume that everyone is acting in good faith (Meyer and
Rowan 1977: 358). This assumption that everything is as it seems, allows an
organization to perform its daily routines with a decoupled structure.
Professionalization is not merely a way of avoiding inspection, but it also
binds both supervisors and subordinates to act in good faith. The same is
required in the public displays of morale and satisfaction, and the more an
organization is derived from external legitimacy requirements, the more it
maintains elaborate displays of confidence, satisfaction, and good faith,
both internally and externally (ibid.). The participants do not only commit
themselves to supporting an organization‘s ceremonial façade, but also
commit themselves to making things work out in the backstage. The
committed participants engage in informal coordination that keeps
technical activities running smoothly and avoids public embarrassments,
even if the methods may be formally inappropriate (ibid.).
However, not everything that goes on in the backstage is necessarily for
the overall good. Adler and Borys (1996) note that even though most
organizations emphasize enabling and empowerment rhetoric in their
43 Theoretical Framework
public communication, behind the façade many activities are still based on
coercion. Enabling and empowerment are considered more legitimate, and
so if any issues of coercion are brought into limelight, they are often
justified as the ―necessary evil‖.
Institutionalized organizations also seek to minimize inspection and
evaluation by both internal managers and external authorities. Evaluation
is harmful, because it can uncover events and deviations that undermine
legitimacy, and because it is an assertion of social control which violates the
assumption that everyone is acting with competence and in good faith. This
violation lowers morale and confidence, and therefore undermines the
ceremonial aspects of organization (Meyer and Rowan 1977: 359).
3.2.7 Limitations of Collective Rationality:
The Garbage Can Model
Organization is a collection of choices looking for problems,
issues and feelings looking for decision situations in which
they might be aired, solutions looking for issues to which they
might be the answer, and decision makers looking for work.
-Cohen, March and Olsen 1972
As noted in last chapter from the work of Meyer and Rowan (1977), one of
the most powerful myths of modern world, especially forceful in the
Western societies, is the myth of rationality. Ever since this myth has been
institutionalized, and thus been taken for granted in our society, it has set
the standards for most formal decision making (as opposed to for instance
medieval decision making, heavily influenced by the institutionalized myth
of divine intervention by God). In the context of examining inertia, the
picture will be left incomplete if this standard of rational decision making is
left unquestioned. Therefore I introduce here the ―Garbage can model of
organizational choice‖ introduced by Cohen, March and Olsen (1972).
Cohen, March and Olsen first define a type of organization called
‗organized anarchy‘. Such organizations have three general properties:
1) Problematic preferences: Organization discovers preferences
through action more than acts on the basis of preferences.
2) Unclear technology: Organization‘s own processes are not
understood by its members.
Organizational Inertia 44 3) Fluid participation: Participants vary in the amount of time and
effort they devote to different domains, and involvement varies from
one time to another.
Cohen, March and Olsen claim that these properties are characteristic for
any organization in part, but only part of the time. Therefore the theory of
organized anarchy will describe a portion of almost any organization‘s
activities, but will not describe all of them.
Where goals and technology are hazy and participation is fluid, many of
the axioms and standard procedures of management collapse. One of the
key concepts of Cohen and his co-writers is that a decision is actually an
outcome or interpretation of several relatively independent streams within
organization:
1) Problems: Concerns of people inside and outside organization
requiring attention.
2) Solution: Somebody‘s product. An answer actively looking for a
question.
3) Participants come and go.
4) Choice opportunities: Occasions when the organization is
expected to produce behavior that can be called a decision.
Cohen, March and Olsen introduce also three available decision styles for
organized anarchies (ibid: 8):
1) Decision by resolution: Normal problem solving; some choices
resolve problems after some period of working on them. The length
of time required varies by the number and difficulty of problems.
The outcome is often a less-than-perfect solution.
2) Decision by oversight: If a choice becomes available when there
are problems attached to other choices, and there is energy available
to make the new choice quickly, it will be made without any
attention to existing problems and with a minimum of time and
energy. Essentially making a decision with little knowledge about its
implications.
3) Decision by flight: In some cases choice opportunities are
associated with problems (unsuccessfully) for some time until a
choice more attractive to the problems comes along. The problems
leave the choice, and therefore it now becomes possible to make the
decision. The decision resolves no problems, however, because they
45 Theoretical Framework
have attached themselves to a new choice. Essentially moving a
decision somewhere else to be made.
In their empirical research concerning adversity in university decision
making, Cohen, March and Olsen found that actually almost all decisions
were made through flight or oversight. They also observed that both
decision makers and problems tend to move together from choice to choice.
This means that many decision makers have the feeling that they are always
working on the same problems in somewhat different context and mostly
without results, while the problems meet the same people wherever they go
with the same result. Furthermore, they found out that the segmentation of
problems reduces the number of unresolved problems, but slows down the
solution (ibid: 10). Important choices are less likely to resolve problems
than unimportant choices. Important choices are made through oversight
and flight while unimportant choices are made through resolution.
Cohen, March and Olsen conclude it to be clear that the garbage can
process doesn‘t resolve problems well. However, it does enable choices to
be made and problems resolved, even when the organization is plagued
with goal ambiguity and conflict, with poorly understood problems that
wander in and out of the system, with a variable environment, and with
decision makers who may have other things on their minds.
3.2.8 Limitations of Learning
Organizational learning obviously has many virtues. It could be argued that
a successful ―learning organization‖ could live its life effortlessly adapting to
its environment and overcoming the obstacles of inertia. However, it should
be noted that processes of organizational learning are subject to some
important limitations.
Levinthal and March (1993) remind that learning has to cope with
confusing experience and the complicated problem of balancing the
competing goals of developing (exploring) new knowledge and exploiting
current competencies in the face of dynamic tendencies to emphasize one
or the other. They identify three forms of ―learning myopia‖, namely the
tendency to overlook distant times, distant places, and failures.
Furthermore, they find that learning processes contribute to organizational
tendency to overinvest in exploitation at the expense of exploration.
Salaman (2001) writes in his critique of the learning organization that
the learning processes are limited by conventional organizational structures
and hierarchy, by organizational cultures that frequently encourage anti-
Organizational Inertia 46
learning values and routines, and by shared structures of organizational
cognition. Salaman also claims that the learning organization overlooks the
extent to which standards of rationality within organizations arise from
dominant external discourses of government and other authorities. Contu,
Grey and Ortenblad (2003) concentrate on the political character of
learning discourse which, they argue, ―works as the surface of intelligibility
pro-posing the reality of work, self-hood, citizenship and society‖, but has
little real value.
The strategic drift introduced by Johnson (1987: 244-247) is an extreme
example of uncontrolled learning: an overemphasis on learning may lead an
organization to learn away from what works. Staw (1976) reminds of the
possibility of negative learning in his notion of ‗escalating commitment‘: As
you fail, you keep investing more in the hope of recouping your losses, not
recognizing that the situation may be hopeless.
Even Mintzberg, recognizing himself as ―an enthusiastic adherent‖ of
‗learning school‘, uses six pages (2009: 233-238) for discussing the
limitations of learning organization, highlighting the risks associated with
too much focus on organizational learning, which can lead to an
organization with ‗no strategy‘, ‗lost strategy‘ or ‗wrong strategy‘. Mintzberg
(ibid: 238) also notes that learning can be very expensive and it takes a lot
of time. Learning can go off in unexpected directions, resources must be
invested in false starts, people have to be convinced of the benefits of one
initiative over another, and the organization may be forced to bounce
around indefinitely, thus paying the price of not settling down quickly
enough to concentrate its resources.
All in all, it can be concluded that even though processes of learning are
crucial for making organizational adaptation possible, the very same
processes also contribute to organizational inertia in their own right.
47 Methodology
4. Methodology
4.1 Research Design and Analytical
Approach
As the purpose of this study was to provide insight into what was going on
in a particular poorly understood organizational transformation, it was
natural to adopt an exploratory case-study-based research design
(Eisenhardt 1989). The data set available enabled a longitudinal design
covering one year before and one year after the merger under study.
I chose a grounded and interpretive approach for analyzing the data as
my goal was to reach deep explorative richness. As Van Maanen (1988)
points out, an interpretative approach gives voice in the interpretation of
events to the people experiencing them, and this ―native‘s point of view‖ is
an important constituent of the analysis. Obviously this approach doesn‘t
imply that the researcher wouldn‘t be an active participant in interpreting
and structuring the data based on existing theory and other contextual
factors (Strauss and Corbin 1990). I had no theoretical preferences or a
priori hypotheses, but let my research question ―How has organizational
inertia affected the forming of the Aalto University?‖ be the lens through
which to seek and view my data (Eisenhardt 1989).
In data collection, I followed the principles of constant comparison
(Glaser and Strauss 1967) and naturalistic inquiry (Lincoln and Guba 1985),
inductively analyzing the data as it was gathered. I employed the processes
of theoretical sampling, pursuing data that was relevant to the themes and
grounded theory emerging from the on-going analysis. The data was
constantly compared across informants and over time, allowing the search
for new informants and to guide the focus of the ongoing interviews based
on prior information. This approach created a constantly evolving and
increasingly focused data set, until a ―theoretical saturation‖ defined by
Glaser and Strauss (1967) was reached.
The basis of analyzing the data was identifying initial concepts in the
data and grouping them into categories through open coding (Strauss and
Corbin 1990). Actual phrases used by the informants (in-vivo codes) were
used whenever possible. Next I searched for relationships between the early
categories through axial coding, which enabled the establishment of higher-
order themes, and assembling these into overarching dimensions.
Furthermore, after this data structure had emerged, it proved useful to
split the data again into three original subsets representing the different
Data Collection 48
groups of participants: pre-merger transformation team, post-merger
management team, and ordinary employees. Through this arrangement it
was possible to first identify the patterns, categories and overarching
dimensions relevant to the whole without bias induced by informant-group
-specific preferences, and then compare these preferences through a
common framework.
The trustworthiness of the data was ensured by careful management of
the gathered data, and peer reviews with other researchers not engaged in
this study as well as periodic discussions with informants aimed at
assessing the plausibility of conclusions made during the course of
research.
4.2 Data Collection
I relied on multiple primary and secondary data sources while conducting
the research. There were three primary sources: 1) Interviews of Aalto
University top management, committed by myself between November 2010
and January 2011 (60% of the primary material), 2) Interviews of ―Aalto
University Transformation Team‖, committed by researcher Jari Ylitalo
between October 2008 and March 2009 (20% of the primary material), and
3) Feedback gathered by Aalto University top management from all
departments of Aalto University in November 2009 (20% of the primary
material).
In addition to these primary sources, additional data could also be
gathered from 4) documentation 5) non-participant and participant
observation, and 6) I had been involved in Aalto University project as a
representative of a central stakeholder 2008-2009 and therefore had
understanding of the key dynamics of the project even before this research.
These secondary data sources acted as important triangulation and
supplementary sources for understanding events and phenomena
encountered during the research. The secondary data sources also assisted
in finding the most relevant primary data sources.
1) Interviews of Aalto University Top Management
Prior research by e.g. Kiesler and Sproull (1982), Isabella (1990) and
Kumar, Stern and Anderson (1993), has identified top managers as key
players in perceptions about change in organizations, and key informants as
active participants in the change itself. They have unique access to
information about the strategies, plans and organizational structures, and
they wield an important insight into an organization‘s intended identity
49 Methodology
before it has realized for the organization as a whole. Therefore it was
natural to choose the university top management as the core source of
information about the organizational change. It was, however, also
important to ensure that the informants would represent a variety of
backgrounds to avoid bias towards the views of any particular interest
group within the top management.
The informants and their different roles during the transformation are
listed in Table 2. Only executive roles within Aalto University or the old
three universities are listed. The 11 informants representing the Aalto
University top management interviewed for the purposes of this study are
marked with ‗x‘ in the last column labeled 2010/11.
Informant Position of Informant Interviewed
Old Universities Aalto planning phase Aalto University 2008* 2009* 2010/11
1 - - President - - x
2 President of University A
President of University A Dean - - x
3 President of University B
President of University B Dean - - x
4
Administrative Director of
University C Member of
Transformation Team Administrative
Director of School C x x x
5 VP of
University A Member of
Transformation Team Dean x - -
6 VP of
University B Member of
Transformation Team Vice President x x x
7 VP of
University B Member of
Transformation Team Associate Dean x - -
8 - - Vice President - - x
9 - Project Leader Director x x x
10
Administrative Director of
University B Member of
Transformation Team Manager x x -
11 - Member of
Transformation Team - x x -
12 - - CFO - - x
13 - - HR Director - - x
14 - - Director - - x
15 - - Member of the
Board - - x
* Interviews by Jari Ylitalo
Table 2: The Informants
The purpose of the interviews was to obtain multiple perspectives on the
strategic change effort from the people who were key players in the
transformation and were supposed to have the best overall picture of what
was going on. To ensure heterogeneity of the information I wanted to make
certain that I had representation from the different organizational and
social sub-groups of the top management: the President of Aalto University,
Data Collection 50
the Presidents of the old universities, the Board of Aalto University,
academic vice-presidents, management that had worked both in the old
universities as well as in Aalto, new management that had not worked in
the old universities, professional managers with private sector background,
people involved with the Aalto project from the very beginning, people who
had been involved only in the beginning, and people who had been involved
only in the end, as well as people from all the three old universities as well
as people without history in any of the old universities.
The goal of reaching this diversity of informants was the other key
principle in their selection in addition to the need to find the best informed
informants. Third principle was snowball –technique, starting from the top
with informants capable of recommending informants through all the levels
of organization, and then using their suggestions in finding the best
candidates. I could also use the existing interview material from 2008 and
2009 to sort out which interviewees would be the most potential for the
purposes of this study.
It is worth noting that almost all informants continue to work in the top
management of Aalto University during the publishing of this thesis, and
the researched transformation is still ongoing. This fact gives rise to certain
sensitivity and political issues. Therefore the informants are not quoted by
name or title, except in certain occasions where this has been absolutely
necessary to put the quote to a correct context. If there have been strongly
disagreeing views among the informants, an effort has been made to
illustrate the points of the different sub-groups. I have also tried to make a
distinction if a certain theme has been generally supported by all or most
informants, or if only a few have commented for its favor.
The final interviews ranged from 45 to 120 minutes in length, and were
recorded and transcribed verbatim. Most interviews had informal ―off-
record‖ parts that were not recorded. These parts were either small-talk or
meant to increase the awareness of the interviewer in some sensitive
matters. The interviews were semi-structured with some customization for
position and organizational tenure. The idea was to keep the conversation
in organizational phenomena, but otherwise to keep the scope as wide as
possible to allow the informants to concentrate on what they considered
most significant.
The interviews included questions about the informants‘ tenure in
universities in general and in Aalto project, how they saw their own
contribution to the project, what they thought to be characteristic for
universities in general and if Aalto was somehow different from the rest,
what were their personal goals in the project and why they thought that the
51 Methodology
construction of Aalto was necessary, what challenges they had faced and
what they had done to overcome them, and how the decision making in
universities worked in their opinion. Subsequent interviews became
progressively more structured and focused as themes emerged from the
data, which allowed for concentrating data collection to identify patterns
across informants and consistencies and inconsistencies across the
organization.
All other informants were interviewed only once except informants 1 and
9 (Aalto University President and Aalto project director), who were
interviewed three times, with the initial two interviews aimed at guiding the
research into relevant direction. These initial interviews were not recorded
but notes were taken.
2) Interviews of Aalto University Transformation Team
When studying an organizational transformation, the longitudinal
perspective – before vs. after – is paramount. This posed a challenge as the
time frame of a master‘s thesis –scale research project is limited and the
transformation of interest had already passed many critical periods.
Furthermore, natural human behavior like retrospective sense making and
enactment (Scott 2003, Aldrich 1999, discussed in chapter 3.2.2) make it
difficult to obtain unbiased information about the previous doings of
informants. To overcome these shortcomings, it became necessary to obtain
such material from the earlier phases of the transformation that was
actually gathered during the early events.
Luckily, such raw data did exist, gathered in 2008-09 by researcher Jari
Ylitalo for his research (unpublished) that takes a leadership perspective on
the Aalto project. As we saw out perspectives as mutually supportive rather
than competitive, it became beneficial to share our raw data. Naturally I
had no chance of influencing the course of these interviews as they had
already taken place, but they were semi-structured in nature and many
topics revolved around themes that were relevant also for my perspective,
such as the goals of the project management, breakthroughs and
challenges, and internal dynamics of the project team. This material was
also processed and analyzed with exactly the same process as my original
material to ensure comparability. Even though this set of raw data was
almost identical in size with my original material, it contributed only about
20% of findings of my primary data, compared to 60% of my customized
interviews. However, as already mentioned, this set of data was crucial in
establishing the longitudinal element of my study, and I wish to express my
deep gratitude to Mr. Ylitalo for making his material available.
Data Collection 52 The informants covered in 2008 and 2009 interviews are listed in Table
2.
3) Feedback from the Departments and Units
To support the Aalto transformation effort, the university top management
instructed the department and unit leaders of the university to arrange
discussion sessions for their own personnel in October or November 2009,
and chart the worries and open questions of the academic and
administrative staff. The leaders were given pre-prepared material for
communicating the undergoing change with a focus in university strategy,
policies and a new career system. The leaders were also asked to gather the
current issues causing concern among the staff and report these issues to
the President of the university.
The unit leaders were given three weeks to arrange the discussion
sessions. Only general level instructions were given about practical
arrangements of the sessions and how the results should be reported, but
the minimum requirement was to provide the key concerns as a list of bullet
points. Many units reported the discussion and atmosphere of the events
with considerable detail, while others were more compact.
Reports from 48 units were received on time. All academic units of the
School of Economics (ASE) and the School of Art and Design (AAD)
responded. In the School of Science and Technology (AST) feedback was
received from 16 units out of 32. Concerning administrative and support
services, the AST central administration reported as one unit, while the
service units of ASE and AAD reported individually. All received reports
totaled 56 pages, mostly bullet point –type listings of concerns and open
questions of the staff.
Analyzing this feedback material provided an important ‗reality check‘ of
the management‘s plans, goals and situational awareness. Combining these
reports with my other primary data made it possible to assess to what
degree the management seemed to concentrate its efforts to solving such
problems that were deemed relevant by the majority of the organization.
Because this data came automatically structured by the organizational
structure, it was also possible to analyze how the concerns and attitudes
towards the merger differed e.g. between administration and academic
units, between disciplines and between types of units.
4) Documentation
I had access to all key documentation related to organizational planning
and goals of the Aalto project. Most of the material of 38 documents was
53 Methodology
intended for internal use only, but there were also i.e. slideshow
presentations the purpose of which was to communicate the Aalto message
and the status of the project to external stakeholders. The material was
generated quite evenly between 2007 and 2010, and included data sets such
as blueprints for possible organizational configurations, analysis of the
current strengths, weaknesses, opportunities and threats of the emerging
university, reports from different teams planning various details of the
organization, and international best-practice benchmarking. Significant
amount of the strategic planning was done with the aid of external
consultants especially during the early phases of the project, and some
reports were also provided by external sources.
Such documentation provided an interesting contextual secondary data
source for better understanding the key organizational choices made by the
management, but also worked as a tool for focusing the interviews to
relevant topics. Because the available documentation was also well
distributed along the entire time span of the Aalto project, it became
possible to see the development of the goals and plans through the years as
well as periods of discontinuity providing an interesting longitudinal
element to this study.
5) Non-participant and participant observation
I was employed as a project developer in the strategic planning department
of the Aalto University from early 2010 until the completion of this thesis.
Prior to focusing to this research, I took part in the planning of several
strategic development projects to support the university management. This
work provided practical insight to issues discussed in this thesis, but also
allowed non-participant observation of the ongoing transformation from
internal perspective and meeting with various people. Furthermore, I took
part in the weekly briefings of our team and several larger events aimed at
university staff, and in most cases I had the chance to take notes also for the
purposes of this thesis.
The trustworthiness of such data may be lower due to the involvement of
the researcher into the research subject, but on the other hand such data
can be collected from the natural environment without the research setting
causing bias to the data. Nevertheless the possibility to live through events
as a member of the Aalto central administration has been a unique
observation spot for developing deeper hands-on understanding about what
is going on in the organization under study.
Data Collection 54
6) Prior knowledge of the Aalto project
It should be also noted that I have been involved with the Aalto project as a
representative of a major stakeholder group in 2008-09. I worked as a
member of the Board of the Student Union of Helsinki University of
Technology and was responsible for the Aalto project in 2008, and 2009 I
was the Chairman of the Board of the student union. Effectively this means
that I have represented the largest internal stakeholder group of Aalto
University during the key planning phase of the project. I have also held
numerous positions of trust within TKK administration 2006-08, including
being a member of the university Board in 2008. These years bring me a
deep longitudinal understanding of the different phases of the Aalto project
and knowledge of key informants. In order to ensure the scientific
objectivity of this work, I have left the analysis of significant events
involving the student community of Aalto University outside the scope of
this thesis. For an analysis of these events, see e.g. Peltonen (2010).
Even though this prior involvement with the research subject inevitably
has some effect on my approach as a researcher, I argue that in fact exactly
this prior knowledge has made a pure grounded theory approach possible.
As Strauss and Corbin (1990) point out, no prior hypotheses should be
constructed on the basis of a literature review when choosing the grounded
approach, but the study should start with data collection and the theory
should then be allowed to emerge from the data. Essentially the process
should be iterative with alternating phases of theory building and data
gathering. Exactly this took place in this study. My prior knowledge of the
subject aimed the literature review into explaining the observed
phenomena, giving rise to an early model that worked as a starting point for
the gathering of the primary data, after which it became possible to
construct the final grounded model.
55 Data and Analysis
5. Data and Analysis
This study of a major university merger and turnaround involved a number
of complex phenomena, but the framework of organizational inertia
described in Chapter 3 proved capable for describing and explaining the
observed organizational behavior. Tables 3, 4 and 5 portray the emergent
data.
The original language of the interviews and feedback from the
departments was Finnish, and therefore all quotes presented from the raw
data are translations into English.
In-vivo codes or natural expressions used by the informants were used
for labeling the first-order categories as extensively as possible (marked by
category labels in parentheses), but occasionally I had to develop a
descriptive label in the absence of a natural one. The 1st order categories can
be found in the cells of Tables 3, 4 and 5.
Assembling these 1st order categories into 2nd order themes and further
to aggregate dimensions, it soon became apparent that grouping the
categories into a single tree-type data structure offered only a partial
solution and dissatisfactory results. Instead, a more complete picture
emerged by assembling the categories in two dimensions to produce a data
matrix instead of a tree. The dimensions of this matrix can be seen in the
columns and rows of Tables 3-5.
The first dimension (the rows of the tables) becomes evident when the
empirical data is grouped through the lens of the research question ―What
are the most significant sources of organizational inertia in the forming of
the Aalto University?‖ Although eight principal sources of inertia can be
found from the integrated primary data, it is evident that four emerge as
clearly dominant: information constraints, internal political constraints,
internal institutional constraints and external legitimacy constraints. Also
limitations of collective rationality and limitations of learning seem relevant
to the overall picture. Furthermore, some findings support themes that can
be classified as sunk costs or barriers of entry/exit, but this evidence is only
limited.
It is obvious that the dimension that results from grouping the 1st order
categories into themes representing sources of inertia is of great relevance
to our main research question ―How does organizational inertia affect the
forming of the Aalto University?‖ However, the picture is still quite static. A
more dynamic model emerges when it is noticed that the 1st order categories
can be grouped into higher order aggregate dimensions (the columns of the
Data Collection 56
tables) that are independent from the 2nd order themes, namely separating
the goals, process and tools of the transformation from one another.
First, all informants illustrate why Aalto University had to be done, and
most arguments revolve around the inertial elements of the ―old system‖, in
fact underlining that organizational inertia itself was a key driver for the
whole transformation to take place. The arguments supporting this
perception of inertia of the old system as a key trigger of change can be
found in A-columns of the Tables 3-5. Second, informants also bring up the
challenges they have faced during the transformation process, and again the
vast majority of their arguments can be interpreted as fighting the inertia of
the system that the key players struggle to change. The arguments
supporting this perception of inertia as a key context of the change effort
can be found in B-columns of the Tables 3-5. Finally, the informants also
describe in detail what they have done in order to reach the goals of the
transformation and to overcome the obstacles they have faced in the change
process (C-columns of Tables 3 and 4). This made it possible not only to
study how the inertial elements in a static (pre-merger) university
environment differed from the inertial elements faced during a university
transformation, but also which inertial elements the management had
recognized and where they had concentrated their change management
efforts.
The final dimension of the data is the emergence of clear eras or phases
in the project, characterized by different management teams and operating
models. In the description of the timespan of Aalto project in Chapter 2.2.3
the distinctive phases were labeled ‗preparation‘, ‗planning‘ and
‗implementation‘. Because an adequate discussion of the preparation phase
would require moving the perspective from the research site to a national
perspective, it has been mostly left out of the scope of this thesis, and the
analysis focuses on the differences of planning (Table 3) and
implementation (Table 4) phases. Some phenomena originating in
preparation phase are briefly mentioned in the discussion of the planning
stage.
For clarity, the feedback data gathered from the staff is presented in its
own table. The dataset obviously does not have the element of leaders‘
responses. In principle the feedback could have been integrated with the
implementation phase data based on when it was gathered. However, the
feedback results from all events witnessed by the staff, including the
planning and even preparation phase, and so it would have been misleading
to associate it with a single era. The feedback data makes it possible to
assess the management‘s ability to identify and resolve key issues relevant
57 Data and Analysis
to the wider academic community, and even find out if the management
itself had set into motion some inertial forces through its own actions.
Table 3: Planning phase 2007-09: 1st order categories by 2nd order themes and aggregate dimensions
1. Planning phase Aggregate Dimensions
Second Order Themes A) Triggers of Change: Inertia in the old system
B) Change Context: Inertia in the Transformation
C) Leaders' Responses
i) Sunk costs 1.A.i) “Have to take care of students that take 7 years to graduate”
1.B.i) - 1.C.i) -
ii) Information constraints
1.A.ii) - 1.B.ii) “Unclear goals” “Communication challenges” “Hurry”
1.C.ii) “Meeting key people across organization” Informal communication “Move to transformation office”
iii) Internal political constraints
1.A.iii) ”University democracy”
1.B.iii) “Internal politics and self-interests” Users vs. supporters Discontinuities between management teams
1.C.iii) “Converting key opponents” “Encouraging commitment” “Workgroups and discussion forums”
iv) Internal institutional constraints
1.A.iv) “Academic freedom” “Lack of trust between academic community and administration” “Bureaucracy”
1.B.iv) “Resistance to change” “Change has to be pulled through by present personnel” Scepticism: “Nothing will really change”
1.C.iv) “Avoiding the refreezing of organization” “Positive example” “New procedures” “New story”, imposed cultural change
v) Barriers of entry/exit
1.A.v) “Lack of entrepreneurial spirit” “General negativity”
1.B.v) “Rearranging staff is a challenge” “Lack of resources”
1.C.v) -
vi) External legitimacy constraints
1.A.vi) External control by authorities Resource control Loose coupling
1.B.vi) “External pressure” Talk vs. action
1.C.vi) -
vii) Limitations of collective rationality
1.A.vii) - 1.B.vii) “No clear ownership or leadership”
1.C.vii) -
viii) Limitations of learning
1.A.viii) - 1.B.viii) Transformation team depending on own experience Lack of experience and necessary skills
1.C.viii) Use of external expertise
Data Collection 58
Table 4: Implementation phase 2009-: 1st order categories by 2nd order themes and aggregate dimensions
2. Implementa-tion phase 2009-
Aggregate Dimensions
Second Order Themes
A) Triggers of Change: Inertia in the old system
B) Change Context: Inertia in the Transformation
C) Leaders' Responses
i) Sunk costs 2.A.i) - 2.B.i) “Old people and new positions don't always meet” “We should focus our resources but don't know what to give up”
2.C.i) The early actors, structures and culture have a long lasting impact on the organization “A common dream” shared by the key actors, idiosynchronic jobs, homogeneity “We should get rid of symbols of power because they alienate people”
ii) Information constraints
2.A.ii) - 2.B.ii) “Communication challenges” “Controlling expectations” Management's limited situational awareness
2.C.ii) “Such organization where people don't complain about communication has ceased to exist.” “Dialogue with the community” “Encouraging model behavior” “Matrix organization”
iii) Internal political constraints
2.A.iii) “University is an arena, not a line” “The ultimate power lies in the hands of professors” “Zero-sum game” “Laissez-faire leadership”
2.B.iii) “The more people involved, the more diluted the solution” “Any change needs the support of the academic community” The change in informal power structure “Internal politics and self-interests”
2.C.iii) Enabling activities that support management's goals Resource control “Using change agents within the academic community” “Encouraging commitment to change effort” Strengthening leadership to oppose political games
iv) Internal institutional constraints
2.A.iv) “Criticism” “Control culture” “Bureaucracy” “Government financial office culture”
2.B.iv) “You will fail anyway” “We like things as they are” “Passive resistance from key leaders” “If I need motivation, I don't go to meet my own subordinates” “We support all good changes and oppose all bad ones” “Nothing really changes” “People think the change won't happen if they fight against it” “Valuable traditions”
2.C.iv) “Attempt to rid the academic community of administrative duties and allow them to concentrate on research and teaching” “Implementing new procedures and policies” “Setting a new vision” “New leadership from outside” “Reorganizing personnel to break old ways of working.”
v) Barriers of entry/exit
2.A.v) - 2.B.v) “The old universities have their distinctive responsibilities to the country”
2.C.v) -
vi) External legitimacy constraints
2.A.vi) Loose coupling 2.B.vi) Talk vs. action “External pressure from a wide variety of stakeholders”
2.C.vi) -
vii) Limitations of collective rationality
2.A.vii) “Tripartite decision making is the worst of systems” “Administrative efforts concentrate on avoiding mistakes”
2.B.vii) “Decisions are concentrated on few key leaders” “Decision making is slow”
2.C.vii) -
viii) Limitations of learning
2.A.viii) - 2.B.viii) “The new leaders have a lot to learn”
2.C.viii) Utilizing internal academic specialists in planning the change Utilizing and adapting theoretical models of controlling change Hiring external professional managers
59 Data and Analysis
Table 5: Staff Feedback 2009: 1st order categories by 2nd order themes and aggregate dimensions
3. Staff Feedback 2009
Aggregate Dimensions
Second Order Themes
A) Triggers of Change: Inertia in the old system - Staff's hopes for a better future
B) Change Context: Inertia in the Transformation - Staff's fears and resistance
i) Sunk costs 3.A.i) “Aalto has better goals, mission, vision and strategy” Many units share the management's dream of Aalto “We are still a little cautious but with positive expectations”
3.B.i) Lots of talk, little action Personal fears about future employment in administration “Administrative staff overwhelmed by change”
ii) Information constraints
3.A.ii) “Good understanding of the transformation because we've been involved”
3.B.ii) “Transformation process is secretive and closed, administrative staff is left out” “It is unclear who is responsible for what” “Management is invisible and impossible to contact, contact attempts are not responded” “Strategy is complex and difficult to understand” “Most communication is very high level and abstract, information about acute practical issues cannot be found” Overall lack of understanding what is going on Rumors and gossip dominate over facts “Lack of professionalism in external and internal communication”, heterogenous messages Unclear goals “Arrogant goals” “The goals are vague. Strategy should not be just a list of good things but there should be courage to choose what not to do.” “Successful examples needed”
iii) Internal political constraints
3.A.iii) - 3.B.iii) “Career system encourages inequality between personnel groups, others than those in the tenure track are ignored” “Our opinion has not been listened to, or at least it has not been heard.” “Encouraging personnel involvement has been only a façade” “Aalto is lead from Otaniemi, other campuses can only follow orders” “Everywhere the TKK's practices are becoming the practices of Aalto, the good practices of HSE are ignored” “We are concerned about the independence of our school” We want more resources for our school “Is the President calling all the shots in recruitment decisions?” “Transformation teams have been chaotic and poorly organized” “Internal administrative expertise has been ignored” There is suspicion between schools if the resources are distributed fairly “RAE was politically motivated and now Aalto
Data Collection 60
is using it to distribute resources to wrong places.” “Equality between schools means lower standards for HSE” How is the representation of our personnel group / school guaranteed in decision making? “There are no seats for all the subgroups of personnel in the council, will this cause tensions between the groups?” “Our unit is so much different from the rest of our department, so we wanted to comment separately”
iv) Internal institutional constraints
3.A.iv) “The transformation process has been inspiring” “Aalto has a more professional administration” “Aalto means better co-operation between administrative units” “Tenure track means more professional and better quality research” Efforts to improve management and leadership are welcome “Aalto is a good reason to improve internal processes” Professional managers from outside are welcome in administration "We will create Aalto"
3.B.iv) “It seems that there will be more bureaucracy in Aalto than in the old system because additional hierarchical levels” “We suspect that the Aalto central administration uses most of the extra resources” “How can we prevent mistakes in decision making if there are no officials controlling the procedures?” “There is no use for TKK-level in the organization” “The process for filling the key manager positions has been secretive and closed, competent internal applicants have been ignored” “The new career system should be an opportunity, not a threat to people who don't fit the model.” “What is so bad in the current system that it must be changed?” “Lack of concrete plans and practical decisions” “Don't the new leaders see how productive we have been” in our administrative unit? “The culture of efficiency and strong leadership fits poorly into a university” “Are our current good procedures saved or are they sacrificed to the altar of harmonization?”
v) Barriers of entry/exit
3.A.v) - 3.B.v) “Tenure track is too slow to satisfy demand”
vi) External legitimacy constraints
3.A.vi) - 3.B.vi) “We understand that the progress has been hindered by the delays of the new law”
vii) Limitations of collective rationality
3.A.vii) - 3.B.vii) -
viii) Limitations of learning
3.A.viii) - 3.B.viii) “The professional managers from outside don't have a deep understanding of academic world, cooperation requires a process of mutual learning.” “It is difficult to be creative in the middle of a terrible hurry.”
61 Data and Analysis
Structure
Tables 3 and 4 are discussed in following Chapters 5.1-3. The Chapters are
labeled by the emergent aggregate dimensions, with the triggers of change
discussed in Chapter 5.1, change context in Chapter 5.2 and leaders‘
responses in Chapter 5.3. The staff feedback summarized in Column B of
Table 5 is discussed in Chapter 5.4 as separate change context from Chapter
5.2, because from the staff‘s point of view also the leaders‘ responses are
part of the context. The triggers of change as perceived by the staff (Column
A from Table 5) are discussed in Chapter 5.1.3 alongside the other triggers
of change.
The subchapters of Chapters 5.1-4 follow a unified structure based on the
second order themes (rows) in Tables 3-5. The themes are discussed in the
approximate order of their relative significance. Furthermore, the
paragraphs of the discussion of a certain theme approximate the first order
categories listed in the corresponding cells of the Tables 3-5.
Finally, the relative significance of different themes and the
corresponding observed variation in foci between different project phases
and aggregate dimensions is discussed in Chapter 5.5.
Triggers of Change: Inertia in the Old System 62
5.1 Triggers of Change: Inertia in the
Old System
The purpose of this Chapter is to present the data showing how Aalto
Transformation Team, Aalto University management and the university
staff analyzed the starting conditions of the Aalto transformation. Key
themes revolve around the perceived need for a change in the ―old system‖
during different phases of the project. The Chapter illustrates how
overcoming certain inertial elements in the old universities was actually a
central driving force and motivation for the change itself.
5.1.1 Triggers of Change: Planning 2007-09
The Aalto Transformation Team was the driving force in the construction of
the new university in 2008-2009 before the actual Aalto University
management could be established. The team was essentially a handpicked
voluntary group gathered from senior vice-president or administrative
director –level executives of the old three universities.
Based on interviews it is apparent that the transformation team became
a close-knit group that shared a common dream and mindset to build
something new and extraordinary. There were some more conservative
minority voices in the team as well, but these became marginalized as the
project went on, and some of the original members left the team. All
informants confessed that they worked mercilessly long hours at and
beyond the limits of their skills and stamina. Many emphasized that the
Aalto project was unique and of national significance, an once-in-a-lifetime
opportunity to make a difference, and a chance to make history.
The informants shared a strong common perception what was wrong in
the ―old system‖, meaning the Finnish universities as they were in 2008.
They painted a rather grim picture of universities where the key features
were inability to make decisions on all levels, lack of trust between
academic staff and administration, and excessive regulation by external
authorities.
Internal Political and Institutional Constraints
According to the informants, the inability to make decisions in
universities originates from several reasons, mostly related to ―how
things are done in a university‖ representing internal institutionalized
practices, as well as issues revolving around the internal power structure or
internal politics. They claim that part of the problems is caused by
characteristic features of the academic community itself, such as critical
63 Data and Analysis
researcher attitude and the overemphasized notion of academic freedom.
Many emphasized that it was impossible to run a university like a company
and the academic freedom and critical thinking were necessary
prerequisites of any university‘s success, but that these fundamental and
highly valued academic characteristics had also a significant negative
impact on the university as an organization. As one informant put it:
In universities there‟s a lot of the problem that people are
overtly critical. It‟s not enough to be critical but you should
also have some answers and ideas. It‟s not enough to just ask
tough questions like the opponents in the public defense of a
doctoral thesis.
The critical and often also negative attitude towards any reforms was
further amplified in the old system by the tripartite university democracy
(the three parties being the professors, other staff, and students),
characteristic for the Nordic universities. Another informant illustrates the
downsides of the system:
The current committees [in our university] are just so
frustrating. People drink coffee and occasionally come up
with some kind of solution, and then the solution is slowly
ground to dust in codetermination talks and especially in the
Board, and then the deans after that, it just doesn‟t motivate
people to get involved.
Furthermore, the informants widely saw the needs of the academic
community for ―endless‖ discussion and communication impossible to
satisfy if anything wanted to be done. As one informant put it:
You can‟t always have a conversation with 20 000 people
about everything, and that‟s what makes people pissed off.
The lack of trust between the academic staff and administration
was another institutional key issue identified by the informants to make any
reform more difficult. There seemed to be a shared feeling in the Aalto
Transformation Team that they had inherited a university where the
bureaucratic administration often made the lives of researchers and
teachers more difficult instead of supporting them at their work. The case
was not that the informants would have complained the administrative staff
Triggers of Change: Inertia in the Old System 64
to perform poorly in their tasks, but instead that the previous regulatory
environment had forced the administration to concentrate on wrong things
in a force majeure fashion eventually resulting in a controlling instead of
supporting administrative culture.
Administrative staff was celebrating how they were
successful in making the researchers and teachers use the
new work hour allocation system. It‟s a tough process to
learn away from this culture. When I‟m talking with the
professors, they ask how they should rethink this, they‟re
used to this system.
A further problem was that some of the shortcomings of the old
administrative culture had been identified and tried to be changed before,
but the efforts had been unsuccessful due to the resilient nature of the
ministry-sponsored control culture. This history induced skepticism also
towards the work of the Transformation Team as an informant from the
administration of one of the old universities points out:
This isn't the first time improvements have been promised. I
just hope that now we could also keep those promises.
Some informants pointed out that there were some differences between the
three old universities, however. It seemed that all the universities had some
problems but the issue of trust between academic staff and administration
became worse as the organization grew larger and the administration more
complex and ‗faceless‘.
The value of trust between the academic community and
administration is negative. I‟ve noticed that the academic
community is suspecting that there are again some
administration‟s plots hidden in this project. I think this is
mostly a problem in TKK. In HSE and TaiK there is more
trust, based on direct communication made possible by the
smaller size.
The culture in TKK is quite strict. In co-creation the decisions
could be made through discussions with the subject. Here we
don‟t have things like that. Everything comes from the top
downwards through the line. And not necessarily even
65 Data and Analysis
through the line, but somehow from the administration. A
little past the line.
External Legitimacy Constraints
The third large issue in the old system that the informants saw as a burden
was the excessive regulation by external authorities. Many actors
contributed to the regulation, most importantly the Ministry of Education,
Ministry of Finance, the trade unions and the government-controlled
sources of research funding.
If you try even a little to do things differently, there‟s always
at least some organization that says you cannot do that, let it
be the trade unions or Ministry of Education or someone else,
that‟s why we have seen that [making any reforms] is very
difficult.
The informants felt that the old universities were powerless to improve
their governance processes because they were expected to adapt their
internal procedures to the demands of the overseeing ministries.
Universities really didn‘t have much power to choose what to research and
teach because they were so dependent on the focus areas and metrics set by
their funders. Furthermore, many informants felt that the government-style
recruitment policy of filling official positions instead of hiring employees
made a dynamic human resources management and hiring the best people
very difficult.
All the important decisions concerning our recruiting, career
system and strategic focus areas are made somewhere
outside this university. Half of the research funding comes
from the outside. It might be great if we could change the
system so that we could make the strategic decisions by
ourselves.
It was also interesting to note what the informants told about how the
universities had adapted to these external legitimacy constraints. There
were multiple hints of a system based on loose coupling, a notion supported
by evidence from secondary data sources such as non-participant
observation. An account from one of the informants illustrates the system:
There's something strange going on. It‟s like the Soviet Union
that we have these so called official procedures and
Triggers of Change: Inertia in the Old System 66
administration, but then these academic units ... have
developed their own ways of getting things done around the
system. And the administrative procedures maintain all this.
67 Data and Analysis
5.1.2 Triggers of Change: Implementation
2009-
Most of the key executives of Aalto University were appointed by the
university Board and the President during 2009 and 2010. The top
management can be divided into three basic sub-groups: the academic
presidents (professors), the top managers of different support services
(external management professionals) and the academic deans (professors).
In addition to this segmentation, some executives were executives also in
the old three universities and many were also members of the Aalto
Transformation Team, while others had their background in external
organizations prior to being appointed Aalto executives.
It is worth noting that three of the informants had also been members of
the Aalto Transformation Team (including the Aalto project director
leading the Transformation Team and the whole project until the
appointing of the President), six had joined the project only after being
appointed executives in Aalto (including a member of the Board and the
President and a vice-president of Aalto), and two were the presidents of the
old universities, continuing as deans in Aalto for a short interim period.
This dynamism in the roles of the key executives necessarily contributed to
some degree of continuity issues and role ambiguity resulting in observable
tensions between some of the informants. Therefore more divergence
between the perceptions of different informants was evident compared to
the interviews of the more homogenous Aalto Transformation Team.
However, the informants still identified largely similar issues failing in
the ‗old system‘ and driving the reform than the Aalto Transformation
Team. Most serious concerns can be again classified as internal political
constraints and internal institutional constraints, but in addition there was
also substantial evidence of behavior indicating limitations of collective
rationality, and some evidence suggesting external legitimacy constraints.
Internal political constraints
All informants produced vivid accounts how the very essence of academic
freedom, characteristic and necessary for a university community,
simultaneously produced a peculiar power structure that was very resilient
to any attempts of strategic leadership.
The university was described as an ―arena‖, instead of a line
organization. The university organization received credit for being ―more
civilized‖ with brilliant people compared to most private sector
organizations. In such an environment the role of the management was
Triggers of Change: Inertia in the Old System 68
seen as providing a ―playground‖ or a ―business park‖ for the professionals
that ―play the games they want‖. However, this culture with individualistic
professors ―leading their own product lines with very long product cycles‖
made any changes very difficult to impose and everything was guaranteed
to take an excessive amount of time. The informants saw the power to
ultimately lie in the hands of the professors, which was the correct way to
control the focus areas of the university, but effectively hindered any
structural reforms. As one professional manager put it:
Every professor has his own hot-dog stand and they have the
liberty to do almost whatever they want with their stand.
And then the purpose of the university is to build the
shopping mall around the hot-dog stand. I think this is what
makes a university different from any other organization.
Another manager continued:
When I came here I was told to remember that this is not a
university but a thousand small kingdoms.
Such distribution of power made also the task of a university president
particularly challenging. One former president described the system as
follows:
[The power structure] has been based on the collegial
interpretation that we are all equal and doing this together,
and there might be someone taking care of the common
matters but he is not a superior. The professors … have
recognized only the President as their superior, occasionally.
The academic community also demanded to be involved in all decision
making, which placed particular challenges for the communication efforts.
Any message from the management was expected to create ―excessive
amount of speculation‖ and ―the worst anti-aircraft fire [critique] comes
from some department complaining that ‗nobody has asked us anything‘‖.
There was also a perception in the management that the prevailing
system was suboptimal and something should be done about it. The
informants recognized that a research group or similar unit was the correct
level to lead the research of the university, but that sometimes the
69 Data and Analysis
professors overextended the concept of academic freedom and mingled
with affairs they didn‘t have sufficient expertise of.
There‟s a belief that the academic freedom would not mean
only academic freedom, but also for instance a freedom to
hire whoever you like or use the university money to
whatever you like. I think such is not academic freedom.
Academic freedom means the freedom of research and
teaching.
Another informant continued that the principles of collegial decision
making had probably worked sufficiently well decades ago when the
university had been small enough for the ―staff to fit in one room and talk
matters straight‖. However, the informant continued that
When [the organization grows and] splits into smaller
segments, the ability to see the whole disappears, a shared
sense of responsibility vanishes and people mostly look only
after their own interests.
There were also differences in the power exercised by different professors.
The academic community was described as a ―meritocracy‖, where the
power was associated with the scientific prowess of the member. Those with
the most distinctive academic records could use their authority for instance
in pulling the strings in and behind the various tripartite committees of the
university.
Those who are recognized, say, have widely published
internationally, they are respected. I think that sometimes it
goes a little too far, because, well, you may have studied
some particle a lot but it doesn‟t make you an expert of all
fields.
Additional phenomenon affecting the university was the intense academic
rivalry fueled by battle over limited resources. According to some
informants, this created an atmosphere of a zero-sum game, where it was
advantageous to oppose any changes that favored only a sub-group of the
community.
Triggers of Change: Inertia in the Old System 70
Here people have got used to a zero-sum game, where any
change in balance of power, or any change in general for
that matter, may create a difference between you and me,
and in a zero-sum game it means that if you are doing better,
I‟m doing worse.
A powerful term used by one informant to describe the leadership in a
traditional Finnish university, was laissez-faire leadership. Regardless
of their background, academic or corporate, the Aalto management
considered the overall quality of leadership in universities to be very bad.
Ultimately the problem had been that good leadership had traditionally
been undervalued in universities. The only credits that had made it possible
to advance in a university had been scientific credits, and this had not
necessarily much correlated with leadership abilities. The academic
community had favored leaders that ―did not cause trouble by trying to
lead‖.
I‟ve been voting for the president in a couple of universities,
and the discussion has always been about finding a visionary
person who wouldn‟t be too visionary. … It‟s been also
typical to vote against instead of for a candidate in an
election.
The leadership had been regarded as a distasteful obligation circulated
among the professors, with leaders ―sacrificing themselves‖ for the
community to carry the common burden, and receiving very limited
support for their leadership.
The given governance model has lead into a situation where
you cannot lead, and even if you have tried there has always
been some committee that can have voted you over and
announced that “we have decided not to do what the leader
says”. That means you haven‟t had the mandate to lead.
These features had created a strong tendency for leaders to avoid and
muffle conflicts trying to save everyone‘s face and to move the problems
somewhere else, while trying to build a consensus that wouldn‘t hurt
anyone.
71 Data and Analysis
For instance the President‟s possibilities for exercising power
are almost zero outside the framework that on the other
hand has been given to him from the Ministry of Education
and on the other hand because he has been chosen by his
community and he has to try to respect the wishes of the
community.
Some informants saw the resource allocation models of the old universities
to illustrate this lack of leadership. The models were also thought to
encourage mediocrity, where everyone was treated the same way regardless
of their accomplishments.
The weak leadership leads into constructing a mechanical
resource allocation model, after which the model leads, not
the President.
A typical example: I was listening in one Finnish
university where they were introducing the results of their
Research Assessment Exercise, and then someone asked how
the results would be used. The answer was pretty much like
„we support those who did well, in addition to supporting
those who did badly, while those who are in between are
supported as well‟.
Internal Institutional Constraints
The informants shared a view that there was definitely a certain way of
doing things in a traditional Finnish university, and this traditional way was
overtly bureaucratic, making the system static and responding to a
changing environment difficult. As one informant put it:
I had been working in two ministries before coming here,
and the life here was much more regulated.
Although most informants didn‘t express it directly, it was apparent that
when talking about bureaucracy informants often described their
impression about TKK administration or in some cases another large
university, University of Helsinki. Problems caused by bureaucracy were
seen in the administration of HSE and TaiK as well but to a far less extent
(even though even there one informant told the bureaucracy to be ―quite
massive‖). As one informant not associated with any of the old three
universities said:
Triggers of Change: Inertia in the Old System 72
The character of the schools has been very different. I
actually think that both HSE and TaiK have had less need to
abandon the government bureaucracy than TKK, because
their small size has allowed them to maintain a higher level
of agility.
This is an important notion because it has a direct impact on the
expectations concerning the merger in the different parts of the
organization. If people are happy with the status quo more resistance to any
change would be expected.
The informants gave two sources for the control culture contributing
to bureaucratic processes in universities: in part the regulation was
imposed by government policies that the universities had to comply with,
but in part universities themselves were responsible for limiting their own
actions.
Even though the governmental regulation could also be discussed later
under the theme ‗external legitimacy constraints‘, it is discussed here
because the examples given imply internal enforcement of external policies,
and because I find this structure to be more illustrative. One informant
describes the system:
We have here a governmental work culture. People are used
to certain processes and reward systems, and also people we
have recruited and who have enjoyed working in such a
system and sought to work there, such things have a major
impact.
Another informant continued:
I think the Finnish universities are somehow introverted and
staring into governmental and self-made regulation.
Government pays for everything, it‟s the only customer we
have. It encourages a system where you are never in a hurry
and you don‟t have to respond to any customer needs but
instead … you are free to focus on the internal administrative
needs of the administration.
One of the most serious constraints set by the government regulators was
seen to be government recruitment policy. Many informants felt that the
system was slow and incapable, and had made it very difficult for
73 Data and Analysis
universities to hire the best talent. Especially difficult was the hiring of
foreign professionals and trying to convince young promising researchers to
stay in a university instead of moving to private sector.
We haven‟t been able to control who we hire to our
university. It‟s been a process with an open vacancy and
you‟ve not been allowed to talk with the applicants and
definitely not allowed to influence them. And then the
external reviewers make their choice and we have to take the
applicant even if he wouldn‟t be good. And then we have
bound our resources for twenty years into a person who
wasn‟t the best possible match.
However, many informants with a background in the administration of the
old universities confirmed that the universities couldn‘t blame only the
government for their rigid governance model.
The universities are very good at generating more controls
for themselves. We always find some new issue and think
„wait a minute, we haven‟t regulated that yet, we must do
something about it‟. I‟ve been laughing at our process
descriptions – there are an awful lot of those – that they have
become so detailed that soon I‟ll have to check from the
process chart how to say „hello‟.
Additional characteristics used by the informants to describe the typical
behavior in university administration were for instance old-fashioned very
formal decision making and meetings, a steep hierarchy, lack of ambition,
lack of trust between academic staff and administration, and a critical
attitude towards anything new.
Even though there were not many positive comments regarding the
current state of the university administration, it must be emphasized that
the informants didn‘t feel that the administration would cause all the
problems in the university because they were incapable or ‗evil‘. Rather the
message was that the administration was the most central part in a chain of
bad policies and undesirable control culture originating in the ministries
and amplified in the administration before taking grip of the academic
departments. The academic staff wasn‘t left without critique either, as two
different informants point out:
Triggers of Change: Inertia in the Old System 74
It is a different matter to be critical in such way that it
constructs something new, than to be critical by complaining
about everything.
Always when there are some new instructions from the
central administration, the academic staff reads the
instructions like the Talmud, trying to interpret what is being
said between the lines instead of simply calling the
administration and asking what something means.
Limitations of Collective Rationality
There were two issues brought up by the informants that suggested failures
in the collective decision-making in a university, namely the downsides of
tripartite system and the administrative culture concentrating on avoiding
mistakes instead of making decisions.
When asked what was characteristic for a Finnish university, all
informants mentioned the university democracy where all internal
parties – the professors, other staff and students – were all involved in
decision-making. However, most comments were formulated like ―it is very
nice to ask everybody how they feel about everything, but…‖ Even though
many informants thought that it was essential to somehow involve the
academic community to decision making, the current system was seen to
have mostly a negative effect on the capability to make good decisions in a
university.
I think this humboldtian university model is used again and
again as a pretext for the mostly nostalgic descriptions of
values of the Finnish university system. Since the 1970s it has
been associated with the tripartite thinking representing a
façade democracy. … It‟s a very curious system where people
are governing themselves and then someone else pays the
bills.
According to informants, the most serious problems caused by the
tripartite system were that it encouraged the internal parties to think
only their own benefits at the expense of the whole, that the system lead to
inability to make strategic decisions on strategic forums, and, consequently,
the key decisions where tried to be made somewhere else. Therefore the
discussion on tripartite forums was concentrated on encouraging
commitment of internal parties to the decisions de facto already made
75 Data and Analysis
somewhere else instead of being true fact-based decision making, or often
decision making at all. This applied especially to the university Board. A
further challenge to fact-based decision-making presented by the tripartite
system was that the different interest groups interpreted the ―facts‖
differently, making rational decision even more difficult.
I think the tripartite system is the worst of all possible
models, because it makes the internal groups to vote against
one another. … We have been forced to make poor
compromises, because the three interest groups have been
unable to reach a consensus.
Another informant continues:
I‟ve been sometimes so frustrated with the decision making.
The Board should be running the university, but the
extremely narrow views of the interest groups dominate. Any
big picture of where we are going was bound to be overrun
by the tyranny of the details.
Much of the decision making was also seen by the informants to revolve
around processes designed to prevent decision makers from making
mistakes. The capability for dynamic decision-making was less important,
as was concentrating on the essential. Instead often trivial details and
formality issues had the tendency to dominate.
It‟s a world where your primary occupation is avoiding
mistakes. … It takes all your creativity, it takes all your
entrepreneurial spirit, and you‟re only afraid to make a
mistake. And then all your efforts focus on control because
you are controlling not to make the mistake. It makes it also
impossible to take any risks.
External Legitimacy Constraints
The informants brought up two clear ways how external interest groups had
a significant effect on the old three universities: First, the government
influenced the internal processes and contributed to the build-up of
bureaucracy through legislation and policies (as discussed earlier under
the theme ‗Internal Institutional Constraints‘). Second, the institutions
Triggers of Change: Inertia in the Old System 76
providing most of a university‘s funding had a major impact on the focus
areas of the university through their resource allocation models.
However, perhaps the most interesting phenomenon described by the
informants was how the academic community really responded to the need
to comply with government-induced regulation. Because many internal
rules and policies within the universities were the result of the university
being a government institution, the rules were deemed to be impossible to
change, no matter how ridiculous they were perceived.
If I decided that the best way to improve the performance of
my team was to organize a sauna party, to give a simple
example, it just had to be „fixed‟ somehow under the radar. It
was possible to arrange but officially it wasn‟t allowed to
show anywhere. … In TKK people have actually been very
creative and agile, but knowing that it won‟t necessarily go
along the governance principles that are official and public.
Open disobedience wasn‘t a possible solution, but things weren‘t always
done by the book either. This was seen as a characteristic feature of TKK, in
particular. Another informant continued:
I think that the policy papers produced by the central
administration didn‟t get much attention in the faculties and
departments. … Effectively this meant that there were two
separate organizations: the official, and then the unofficial
that operated in the space between the official rules.
All in all, the evidence suggests that at least some degree of behavior related
to loose coupling has taken place in the old universities.
77 Data and Analysis
5.1.3 Triggers of Change: Feedback from the
Staff – Hopes for a Better Future
Based on empirical data presented in Chapters 5.1.1 and 5.1.2, it is obvious
that the key people building Aalto University have had a clear mission and a
shared sense of urgency in trying to improve the shortcomings of the old
three universities. It is interesting to compare how the broader academic
community perceived the same situation and whether they found the same
problems in the old system to be in need of a reform. For illustrative
purposes the representative quotations have been classified by background
organization (TKK/HSE/TaiK) and organizational function
(academic/administration). It must be stressed that there is much
heterogeneity beyond this simple division, but the most important trends
relevant for the purposes of this study should become visible even without
further segmentation.
Furthermore, it should be noted that the purpose of gathering the
feedback from the academic and administrative units in fall 2009 was to
collect feedback from the transformation process and give the staff a chance
to list issues that caused them concern. This dataset concentrates primarily
around these issues, and the pre-merger situation is commented only
briefly. The context of these comments is most often being for or against
some reform announced by Aalto management, making the dataset more
suitable for the analysis in Chapter 5.4.
In general all units, both academic and administrative, expressed their
support for the overall goals of the Aalto University. Almost everywhere the
Aalto was seen to have much potential, and the ambitious strategy and
vision of the university was welcomed. There were many concerns as well,
but they were mainly focused on the practical implementation of the merger
and were very similar across all units. These implementation issues are
covered in the next Chapters. All-in-all, it can be stated that there was little
feedback suggesting that the units would have considered the pre-merger
operating environment so excellent that they would have been skeptical
about a possibility of change to the better. On the contrary, the units
brought up several practical issues which they hoped that could be
improved by Aalto.
The creation of the Aalto University has made us think about
the core of our activities and also to plan for significant
reforms in the future. (TaiK, academic)
The goals are positive and ambitious. (HSE, administration)
Triggers of Change: Inertia in the Old System 78
We are doing well already and the coming of Aalto will
support this good development. (TKK, academic)
The most of the academic units shared the management‘s view that the
government career system had caused a lot of problems and were eager to
get rid of the old system. Many considered a new career system to be the
most important improvement offered by Aalto and believed it to provide a
more professional impression of the university‘s research organization as a
whole.
It‟s great to have a career system, because earlier we didn‟t
have anything. (HSE, academic)
The academic units also saw the bureaucratic administration to make their
life more difficult, especially in the TKK. The administrative units did not
share the same hopes, except in TaiK where there was willingness for
reform. The departments were hopeful that the administration could be
turned more service-oriented, although they were also skeptical towards the
growing Aalto central administration.
The amount of administrative routines has to be decreased:
filling all kinds of coupons, bad IT-services, applications for
funding and polls take a way too much time and get on
people‟s nerves. (TKK, academic)
We hope that things would really change and that such a
service organization would be built for Aalto where
reporting would go in a line. We hope that next year [2010]
there would be no more HSE administration, TaiK
administration and TKK administration, but instead Aalto
services. This would make it possible to professionally
develop services. (TaiK, administration)
Third positive development brought up by the staff was the need for
developing academic leadership and management from a level that was less
than ideal. The staff believed that good leadership would enable everyone to
better concentrate on research and teaching.
It is positive that Aalto pays more attention to academic and
administrative management. Leadership culture should be
79 Data and Analysis
consciously developed so that researchers and teachers
would have more time to concentrate on their primary jobs.
(TKK, academic)
Change Context: Inertia in the Transformation 80
5.2 Change Context: Inertia in the
Transformation
As discussed in Chapter 5.1, the Aalto project management shared a largely
unified story of the shortcomings of the ―old system‖ and had a vision what
should be done differently in Aalto. Many of these thoughts were also
shared by the staff. However, the largest challenges in such an ambitious
project are rarely associated with the planning, but instead with actually
pulling through the transformation. Overcoming the inertial elements
associated with the pre-merger organization may have been an important
motivation for the change itself, but when the change really starts to take
place, the organizational inertia becomes a challenge for the change
management. The inertial elements found to be at play during the change
effort are discussed in this Chapter.
5.2.1 Change Context: Planning 2007-09
Based on the 2008-09 interviews of the Aalto Transformation Team, the
project management ran across a broad range of inertial challenges. Almost
all inertial themes discussed in this study are present, but the most
dominant were problems associated with information constraints, internal
political constraints, internal institutional constraints and external
legitimacy constraints. Limitations of collective rationality and limitations
of learning emerge as secondary themes.
Information Constraints
In a fast-moving and complex endeavor such as the Aalto Transformation
the communication is likely to cause significant issues. Based on the
interviews, this indeed was the case with challenges both in maintaining
situational awareness of the management and in communicating the story
of the management to the larger community.
The dominant factor limiting the situational awareness of the project
management was simply the lack of time and resources. Almost all
informants felt that they had been stretched to and beyond the very limits
of their capability and had little time to communicate with others what they
were doing. Combined with the heavy burden of expectations contributed to
a high-stress situation, but on the other hand integrated the management
into a close-knit team.
81 Data and Analysis
If you receive an e-mail from someone at 3 AM in the Sunday
morning and then many people react to the mail, it‟s a sign
that we‟re actually doing quite a lot.
I can‟t believe how anyone can pull through something like
this in a year.
It‟s not easy, it‟s like a constant feeling of inadequacy.
The hurry contributed to difficulties in maintaining situational
awareness. Many informants felt that even though they shared a common
mindset of the grand goals of the project, on a more practical level the goals
were often vague. Some informants also expressed concern that as a result
the work on the different fields might not be compatible.
Well, we're dabbling around with terrible intensity, but it's
not clear what we're doing.
There‟s a big risk that the project will split up into silos at this
phase. We have to keep the big picture in mind.
The fragmented picture of the situation and lack of time caused also
problems for external communication, telling the academic
community and the outside world what the project management was doing.
All informants recognized these challenges, but most thought that not much
else could be done.
The professors don't have a clue of what is happening: “Does
this affect us somehow?”
Communication is something that is always failing because it
hasn‟t been completely thought through, but on the other
hand you just don‟t always have the time to think it through.
Some informants thought that the Transformation Team needed extra help
for handling the communication, while others dismissed the problem.
Communications is something where we need help both
internally and externally.
Change Context: Inertia in the Transformation 82
I think the upcoming change is terribly small compared to
how much it is feared.
The challenges in external communication were also one of the primary
sources of negative feedback to the Transformation Team, which caused
frustration.
Some of the feedback makes me astonished and also a little
depressed. People are writing that nobody is telling them
anything. There are like dozens of people working very hard
to arrange all the time information sessions and everything,
and it just feels so unfair to read such comments.
Internal Political Constraints
A major organizational transformation necessarily causes changes also in
the power relations of the organization. Therefore it was not surprising to
find plenty of evidence of internal politics being played out during the
transformation. However, it was interesting to find out that much of the
power games –related empirical evidence actually pointed to games where
the Transformation Team itself was involved. Three different types of
games emerged from the data: 1) games played by individuals, departments
and schools to protect their self-interests against others 2) tensions
between the ―original‖ Transformation Team and ―outsiders‖ joining the
project, and 3) periods of discontinuity, where the leadership of the project
was handed forward to a new team. All-in-all, the quite pessimistic
expectations of one informant during the early phases of the project
received extensive support from the empirical evidence:
I can't tell if there is any internal politics to be seen right
now. But it's obvious that it will be there. It won't be any
different from what we're used to.
All the three old universities preceding Aalto had their own strong
identities, and especially during the early planning of organizational
structure and decision-making system of the new university, most members
of the academic community saw themselves primarily as representatives of
one of these three original identities. After the Aalto University was
officially formed these identities had little reason to change, because there
were few visible changes in the work environment of the individuals.
83 Data and Analysis
Therefore the old identities were much inherited by the three original
schools within Aalto. The setting encouraged key managers of the old
universities to guard the interests of their own schools. As one HSE
executive put it:
One of the neuroses of HSE and the other schools is to
guarantee that they get enough power.
Another informant continued:
The trio of current presidents unavoidably looks at matters
from the perspectives of their own schools.
The situation sparked frustrated comments from some informants, for
example:
If the game has this far been about who gets what, we are
now facing the fact that we really have to start thinking
about and building the new university.
According to the informants, much of the same dynamics seemed to take
place also in the lower levels of the organization, between departments and
professors.
The situation is such that some are actively constructing the
new university while others are preparing their own
positions.
If someone would already know that he would become a
dean in one of the schools, he would probably be building this
with a little different intensity than now when there are still
a couple of power struggles to be fought.
The power was a limited resource also within the Aalto project
management. Although the members of the Aalto Transformation Team
(also known as the ‗A8‘) were well aware of the temporary and preparatory
nature of their position, the immense work effort they had given to shape
the form of the new university had also created a strong sense of
―ownership‖ in ―their university‖. Their dedication to the task identifies the
Transformation Team as ―supporters‖ (see Chapter 3.2.3 or Scott 2003:
Change Context: Inertia in the Transformation 84
133) of the emerging organization, as opposed to less dedicated ―users‖
normally much more abundant in organizations.
The deep commitment of the A8 meant that the team was anxious about
what would happen after the actual Aalto University management, led by
the new President, took over the project. The expectations of the informants
seemed to be somewhat contradictory: on one hand they hoped that the
new management would start as soon as possible to establish a clear
leadership and ownership, but on the other hand they wanted to be there to
ensure that the new management took the project in ―right‖ direction.
It would have been good if [the new President] could have
started earlier.
This process needs a leader capable of making decisions, and
[the new President] is such leader.
There has to be some continuity. If the A8 would completely
step aside and new people would be sought to pull through
the implementation, it would not be optimal because we
would lose an awful lot of tacit knowledge.
The Transformation Team was apparently expecting an incremental
transition where the President would start as the chairman of A8, ensuring
a controlled communication of tacit knowledge and an uninterrupted
continuation of the A8‘s work. Then eventually the President would have
had time to gather her own management team, which might include some
members coming from the A8, again ensuring continuity.
We have to hold on to these people, this is the team which is
going to pull this through. Somehow we just have to get [the
new President] in the team.
I hope that [the new President] will be chairing our meetings
every Thursday.
I think that the coming of [the new President] won‟t have
much impact on our routines.
85 Data and Analysis
Furthermore, many members of the Transformation Team also faced
significant personal ambiguity, as many had no positions to return to in the
old organizations, should the A8 be disbanded.
Personally I don‟t know if there‟s any work for me after this
ends, but I believe that I can come up with some job. Some
people are just climbing the walls because they can‟t take the
situation any more.
What actually did happen was that the new President disbanded the Aalto
Transformation Team almost immediately and concentrated on creating the
actual Aalto University management team, or ‗President‘s Management
Team‘. The sudden shut down of A8 apparently caused much time to be lost
during the final year of preparations before the new university was
supposed to start its operations, as there was not yet any new management
to take over the A8‘s work. However, all A8 members continued to work for
the Aalto University, many of them in senior executive roles, so the fears of
permanently loosing tacit knowledge or the personal risks of the team
members did not actualize. Yet still, the significance of sudden major
changes in the power structure of the project management for the capability
of senior leadership at the critical phases of the project should not be
underestimated.
Internal Institutional Constraints
A multitude of institutional pressures affects the life in universities. A
governmental work culture was merged with a culture of perceived
academic freedom, producing a bureaucratic system where everyone
expected to be involved in decision-making. The traditions are long and all
the studied three old universities have played a central part in the century-
long national success story. On the personnel side, the careers in these
universities are long, circulation of staff is very modest and the average age
of the work-force is very high (Aalto University 2008). All the studied
universities are also large organizations, especially TKK and Aalto. All these
factors contribute to the fact that there is certainly an established ―right way
of doing things‖ that may not be easy to change.
From the perspective of management trying to conduct some form of
change management the institutional constraints often take form as
“resistance to change” by the subjects of the change effort. The term is
Change Context: Inertia in the Transformation 86
quite ambiguous, but the corresponding phenomena were clearly evident in
the data.
There‟s an immense source of well-founded and unfounded
fears, like a thought that can‟t you just leave us alone and
simply give us the money and we will continue just like
before.
The informants perceived that personal fears contributed to resistance
especially in the administration, while a ―change of mindset‖ was necessary
for the whole organization.
Then we have this administration that has grown too large
and where there is uncertainty about the future and
probably also fears about what will happen.
Also the mindset of the teaching staff has to change quite a
bit. Improving the quality of teaching will be a tough nut to
crack for many.
However, all informants saw it most difficult for the administration to take
a constructive stance in the transformation.
The idea that the central administration must be determined
to pull this transformation through, actually means in
Finnish that the central administration must be determined
to hold its own ground.
The last quote also illustrates the additional challenge resulting from the
fact that the transformation really had to be implemented by the
existing personnel. The informants were very well aware that it was
impossible to recruit but a very limited number of new professionals from
outside. Therefore it was important to try to circulate existing personnel to
new jobs within the organization to ease a change in culture, habits and
processes. At the early phases of the project, communicating this
requirement to the staff seemed to pose serious challenges.
The key thing to be changed is the thinking of the community.
The people are referring to some foundation that is like some
god somewhere far away and they're waiting for the
foundation to come like some god from a machine and to
87 Data and Analysis
save them. People don't understand that it‟s all of us together
who will have to provide that salvation.
There was also a lot of skepticism questioning if Aalto really could fulfill its
promises and if any of the changes would actually be implemented, because
based on their previous experience people believed most changes to make
things only worse. Therefore it was crucial to win key people with authority
to the support of the cause.
Most people didn‟t believe this would actually happen before
the Board was appointed. But if those people believe in this
project, perhaps I should start believing too.
External Legitimacy Constraints
When discussing the impact of external interest groups on Aalto University,
it has to be remembered that the whole university would not exist without a
concerted effort of the government and the Finnish economy. Furthermore,
the larger framework of national university reform came largely as a
response to broader needs of the whole higher education sector, with Aalto
spearheading the entire reform. Therefore the whole essence of Aalto was to
have a broader societal impact, not to simply exist in isolation. This meant
that there existed a broad range of interest groups with a stake in Aalto, and
that there were a lot of external expectations that Aalto struggled to
fulfill.
It‟s about a historical change, where the role of the whole
university system is being rethought … and frankly this has
been understood only by a handful of people.
As the importance of Aalto was realized already during the first phases of
the project, many actors tried to code their own goals into the
goals of Aalto. This was evident especially during the creation of the so
called ‗Sailas report‘ that became the backbone of all later planning efforts.
The political lobbying was already fierce much before the
Sailas report was published.
According to the informants, other key players included for instance the
Ministry of Finance that tried to regain government influence on some
Change Context: Inertia in the Transformation 88
issues that the Ministry of Education had left for Aalto to handle as the
university saw fit. Another game was apparently played by the University of
Helsinki that used its influence to shoot down benefits and freedoms
designed for the foundation-based universities by demanding changes to
the proposed new Universities Act. Also the other universities resisted
any ―special treatment‖ and especially extra resources that would benefit
only Aalto, and the trade unions lobbied fiercely against the abandoning
of the government career system which was feared to have a negative
impact on the benefits of personnel.
On this field the problem is that it's not about what we want
but there is the surrounding society limiting and controlling
what we're doing. If we change for instance any systems
related to people's careers there is a lot to discuss with all the
interest groups before anything can be realized.
Internally it was naturally the task of the management to create a positive
and empowering atmosphere to make the change possible. In addition to
this, the external pressures on Aalto project management demanded the
creation of a successful external image of a rapidly progressing project.
Obviously creating and communicating this image externally meant that it
was also visible internally. However from internal perspective, it was
possible to effectively observe the difference between what Aalto
communicated that it wanted to be and the reality in the units what the
situation really was. There had been no time to yet implement most of the
plans and promises of the management, and therefore this difference
between the external image and internal reality created some credibility
problems perceived by the staff as differences between talk and
action.
People know how to talk but the problems begin when you
should really start doing things.
We should be doing and planning at the same time so that
some corrective movement would be possible. But we have a
lot of things that have been planned for half a year, and god
dammit nothing has happened. … The world has time to
change in between if we try to plan everything ready before
implementing any of it.
89 Data and Analysis
Limitations of Collective Rationality
As stated before, the Aalto project had a lot of inherent complexity and
ambiguity. Especially in the turbulent earlier phases of the project with no
established ownership, hierarchy or many other key organizational
characteristics, also the decision-making processes seemed to be diverse
and not always very deterministic.
The project has gone surprisingly well if we take into account
that we don‟t have any owner at all.
During the planning phase when the Aalto Transformation Team (A8) was
the driving force of the project, there were three different decision
makers on the scene: the Board, the A8-team and the old universities. The
formal ownership and ultimate authority was within the Aalto University
Board that had been recently nominated in fall 2008. However, the Board
had only limited time available as it was made up of high-profile external
members and gathered on average once per month.
The challenge with the Board is that it‟s not very easy to
understand the dynamics of this community and our
ambitious goals if you spend only a day or two per month
with this project.
Therefore the issues discussed in the Board meetings where prepared by the
A8. A8 also had to take care of all practical matters, but they were careful
not to make any such decisions that would have a fundamental effect on the
university before the new President was appointed. Also the Board wanted
to wait for the President in many significant matters.
I‟m just paving the way for the [the President], that is my
role.
The informants had also numerous other perspectives to the role of the
Board, including readiness to make fast decisions and capability to steer the
project towards the strategic goals, but also on the other hand tendency to
mingle with affairs that the Board should leave for others to worry about.
This suggests that the Board was willing to make decisions, but that some of
these decisions should have been made somewhere else.
Change Context: Inertia in the Transformation 90
The people in the Board are used to making decisions, and it
must be a strange culture for some of the university people.
The Board has really taken the stance that we are now
building a world-class university and not just some merger
of three university administrations.
It annoys a bit about the Board that some members seem to
have trouble understanding their role … and to keep their
fingers off the daily management.
The third potential level of decision-making was the old three
universities which still had all the necessary structures and processes
running. The problem was that the Transformation Team and the Aalto
University Board didn‘t want the old universities to have a significant role
in making decisions on behalf of Aalto, because their involvement was
feared to require bargaining and compromising the goals of the project.
Also the authority issues of the old universities to make key decisions on
behalf of Aalto were problematic, and so the old universities were largely
sidelined from the key decisions.
The three presidents [of the old universities] show themselves
very little. I don‟t know if they show at all. I don‟t know what
they are doing. … Some have surrendered, some try to still
keep up something from the old culture, and some don‟t have
a clue what we are doing.
This setting effectively created a situation, where no one had the
combination of capability, authority and willingness to make the important
decisions, although the all three decision-making levels were capable of
decision-making in smaller matters. In practice this meant that there was a
power vacuum where the academic leadership, the President, of the Aalto
University should have been. A picture emerges where many important
decisions seem to have been made through flight and oversight as described
in Chapter 3.2.7, while more trivial matters can have been settled through
resolution but often by random decision-makers.
Limitations of Learning
As the change effort was rushed forward by the Aalto Transformation Team,
the skills of the team obviously had a profound impact on the outcome of
91 Data and Analysis
the whole project. Because none of the participants had ever created a
university before, the change was simultaneously a tremendous learning
process for the change management. It was possible to learn some new
skills, but the fact was that the members of the A8 were chosen for the task
because they were experienced professionals. Therefore their key asset
in managing the project was their experience, which set some limits to how
innovative approaches they were capable of finding.
When there are people involved who have been running an
organization before, including myself, there is a danger to
stick with what you already know.
I think that we‟re not very close to creating anything new.
Even though there was the risk of doing what was done before, many
informants emphasized that there was no cynicism in their approach and
they managed to maintain a mindset encouraging new approaches.
There's a lot of enthusiasm that we're doing a good thing,
there's no cynicism based on earlier experience.
However, the experience had also its limits. Some ideas and plans could not
be implemented because of insufficient skills. Often progress was also
slow because people without earlier experience were forced to learn the
basics of a new field.
I haven‟t been running a large international group ever
before.
We need some decent external HR-person to take these kind
of things through, we don't have a single such person here.
Change Context: Inertia in the Transformation 92
5.2.2 Change Context: Implementation 2009-
The part of the data presented in this Chapter represents the perceptions of
the Aalto University top management on the challenges they faced during
the change effort. Capturing this perspective was the primary goal of the
interviews, and luckily it also constitutes the largest category of the
processed and analyzed interview data, signaling its significance.
Largely the same dominant themes emerge as in the earlier interviews of
the Aalto Transformation Team: excessive evidence concerning especially
internal institutional constraints as well as information constraints, internal
political constraints and external legitimacy constraints. However, also
limitations of collective rationality emerge as a new dominant theme. In
addition also sunk costs and limitations of learning emerge as secondary
themes.
Internal Institutional Constraints
Several inertial forces resulting from difficulties in altering established ways
of doing things in a university were evident already in the planning phase of
the Aalto project as demonstrated by the interviews of the Aalto
Transformation Team in Chapter 5.2.1. However, the full force of internal
institutionalized processes and culture became apparent only after the
management really started implementing the plans.
The whole process started with a lot of skepticism towards the ability of
the management to pull through a visible change.
There was certain slowness in the entire transformation
process. Especially in the beginning people, most of all in the
administration, just leaned back with their hands in hips and
told that “you don‟t have a chance”.
At the grass-roots level among the elder professors there‟s
certain cynicism questioning if anything will actually
change.
One of the problems was that as there were also people looking forward to
Aalto with enthusiasm and many positive expectations, but as
implementing many improvements dwindled and took longer than people
had expected, this was interpreted by the opponents as a proof that their
skepticism had been justified. Much of this critique spawned because the
academics perceived that the extra resources promised by the Aalto
management were nowhere to be seen as of 2010. The situation wasn‘t
93 Data and Analysis
helped by somewhat contradictory messages from the management. Some
managers said that the allocation of additional resources progressed as
planned and the resources were supposed to be distributed only after
careful planning no sooner than 2011. But others claimed that much of the
extra resources actually had been distributed, and most of the critique
simply came from units where the management hadn‘t allocated more
resources.
Many schools and faculties thought that the extra resources
given to Aalto because of this transformation would have
been visible in the schools‟ budgets already this year [2010].
But this has not happened, some money has been distributed,
but nothing significant. And this is how it was originally
planned.
When we are now progressing with the strategy first [in
allocating resources], it‟s a very slow process and it gives
currently rise to a lot of debate.
The management also believed that for some part the system would
ultimately change only after a “new generation” of academics and
administrative staff free from the old assumptions would get a foothold
in the organization. The management didn‘t plan for any drastic measures
to speed up the turnover of the staff, but rather believed that time and
natural renewal of the staff through retirement would slowly but surely
enable the organization to turn into a new course.
A great generational change is taking place among the
professors, and there is a chance that professors with fresher
ideas will emerge and take over the field.
However, most managers thought that the academics weren‘t the largest
problem, but they faced the fiercest resistance within the administration,
effectively within their own organization.
If I need some kind of motivation, I definitely don‟t go to seek
it among my own subordinates because they think that we
are scrapping many great things. Instead I go to meet
students or researchers, because they are thinking about the
possibilities and not the negative side, such as “before
Change Context: Inertia in the Transformation 94
everything was so well when we had the quality manual and
the best processes”. The patient died but we did everything by
the book.
Naturally the distinction between good and bad processes depends on the
point of view. As one informant (one of the old presidents) pointed out
The change, separation from the government, doesn‟t mean
that there would be a lot of freedoms. It doesn‟t bring
anarchy where everyone can do whatever he wants. Actually
it brings in many cases at least as disciplined or even more
disciplined ways of working for the administrative side, but
on the other hand hopefully more possibilities for the core
businesses [teaching and research].
Therefore the administrative change was more about replacing many of the
old processes than significantly shutting down old services or starting new
ones. As in many cases the old administrative professionals also continued
in similar duties as before the merger, many new processes came under
intense scrutiny. Often the new ways of doing things were perceived inferior
to the ―good old times‖. As another old president described the dynamics:
I just wrote that our school supports all good changes and
opposes all bad changes.
The fact that the new management tried to establish a firm control over the
support services but at the same time emphasized the freedom of academic
activities, teaching and research, apparently caused some communication
challenges. The problem was that the Aalto management wanted the
academic leaders to really lead and ―free them from the administration‘s
oppression‖, but the efforts to standardize service processes gave
contradictory signs of increased control, even though this was not the
management‘s intention. The resulting confusion caused some frustration
on all sides: the top management, the academics, and the administration.
People are shouting for more rules all the time. And then
when we try to prevent this escalation [of control] and say
that “no, you do it on your own”, people ask “but where are
the rules, what are we allowed to do?” And if you say “ok,
95 Data and Analysis
here are the rules,” then people answer that “we don‟t want
that kind of rules, we wanted different ones”.
If the management wanted the academic leaders to be more independent
but had some trouble at least initially to get this message through, the
straightforward way of reshaping the support services top-down gave out
the opposite message for the administrative staff. Many support service
professionals interpreted that the management didn‘t value their expertise
or the traditions of the old universities. Based on the feedback gathered
from the administration there were some administrative units, especially in
the TaiK, that saw the transformation process as inspiring and felt that they
had been involved and committed to the change effort. However, in most
cases this perceived Aalto management‘s lack of respect for the previous
administration was a major source of opposition, mistrust and
demotivation among the administrative staff.
It is a great source of discontent that people feel in TKK now,
as they felt quite strongly already during [the Aalto
Transformation Team], that the skills and experience of our
people in governing such a large university, has not been
appreciated. At least people perceive it so that the new
management thinks that nothing works here.
Actually the new management did recognize this problem, but the challenge
was that they wanted to change the mindset and working culture of the
administration from controlling to servicing, and didn‘t know how to merge
the story of valuable traditions with this story. As a result the
communication was always about future, almost excluding the past.
Every now and then we make pretty serious communication
failures when we never remember to respect the significant
traditions of the three schools.
All-in-all, there was considerable evidence of organizational inertia
observable in the accounts of the informants. Although there was also some
evident frustration, in general the managers were very aware that a major
change in processes, not to mention culture, could not take place overnight.
Many of the managers were also confident that there were different
phases in the change as experienced by the community, and that
Change Context: Inertia in the Transformation 96
skepticism and resistance to change were almost inevitable in the
beginning.
Often it takes surprisingly long time, before people realize
that this is actually going to happen. Some think that they
can resist the change so that it won‟t happen. … Some have
thought that “I can continue my life as if nothing would have
happened.” … But luckily there are others thinking that
“wow, finally something is happening”, and they start to
move.
The managers recognized that individual members of the community
experienced the change very differently. Some were optimistic while others
pessimistic, and some could move through the change faster than others.
The management also acknowledged that there would be a minority of the
staff that could not or would not adapt, and would eventually leave the
organization. Some had already left.
One strong visualization of the expected change behavior shared by
many of the informants was a ―change curve‖, a version of the Kübler-Ross
curve (applied to change management as ―The death valley of change‖ e.g.
by Elrod and Tippett 2002). As a result of accepting this model as their tool
the management was prepared to encounter a sequence of reactions from
their organization, such as ―shock, numbness, denial, fear, anger,
bargaining, depression, understanding and testing before acceptance and
finally moving on‖. The managers even believed themselves to go through
the same cycle but faster than the others because they were better informed.
Usually it goes so that there is a phase shift between people.
While some are already rising from the abyss, and you are at
the same time desperate why people don‟t come along, but
the other half of the organization is only just falling in the
abyss.
If you look at an individual person, he will have multiple
change processes one following another.
Everyone has a similar change curve, and the organization
changes only after the people change.
97 Data and Analysis
This has also the curious side that the management will go
through the cycle faster than the others, because the
management knows about things, and is involved in making
the decisions.
Information Constraints
As the Aalto Transformation Team, also Aalto University management saw
communication challenges as a major factor making the change more
difficult. The Aalto Transformation Team was still small and informal, and
so most of the information challenges were external, even though the hurry
contributed to problems with internal situational awareness as well. The
Aalto management faced largely the same problems, but the fact that they
really had to implement the change through transforming the everyday
work of people within the organization made successful communication
even more critical. Furthermore, they faced an additional challenge because
they simultaneously had to construct their own management organization,
giving rise to new internal communication challenges. More and more
people were involved with cumulating responsibilities that no one else than
the Aalto management would take care of.
Externally the management was primarily concerned with difficulties in
communicating on one hand the goals of the project and on the other
hand what was being done.
We haven‟t been very good at describing the journey into
being a world-class university, what it means. … Our
message about what kind of university we want to be has not
been clear enough. It‟s apparently very difficult to share even
among our professors.
Many people don‟t know what the name of the game is. This
lack of information, bad communication, is the partial cause
of mistrust and people‟s concern over their own future.
All managers agreed that the principal cause of communication problems
was the lack of time. However, some thought that the problems could have
been helped if they would have had more communication professionals
available to support the management, while others thought that the
situation could not have been helped because only key leaders could
Change Context: Inertia in the Transformation 98
communicate the change effectively and their time was a very limited
resource.
If I would do this again, I would demand a lot bigger team
with the other half doing just communications.
The people who can tell where we want to go are huge
bottlenecks. For instance [the President] should clear her
calendar from everything else than communication and
dialogue.
Some managers also saw the flawless communication of such a complex
change inherently impossible task, and had given up trying to solve the
problems beyond ―appropriate‖ level of communication.
Such organization where people don‟t complain about
communication has ceased to exist.
In any case, all informants strictly denied that the management would be
secretive on purpose, or that limiting information would have been used as
a source of power.
Finally, the informants also listed managing expectations as a key
communication challenge. Again the issue was communicating the right
goals.
Managing expectations both inside the university and
externally is a huge challenge. How to keep the expectations
high enough without giving such promises that turn out to be
impossible to fulfill.
The other side of the coin was the challenge of maintaining a coherent
situational awareness to ensure that the change effort was coordinated
between different areas of responsibility. As in earlier stages of the
transformation, the key problem was that the management was heavily
overemployed with every manager having to build his or her own team and
organization ―from scratch‖. However, in contrast to earlier stages also the
size of the organization had started to grow, which effectively meant
that everybody could no longer communicate with everybody. The situation
was made more challenging by the fact that the organization itself and the
management processes were still at their early stages of development.
99 Data and Analysis
People are talking on the campuses that all the things are
happening in [Aalto central administration] and that they
don‟t know what is going on in there. But unfortunately often
the situation is that we who are not members of the
[President‟s Management Team] don‟t know what is going on
either. And this is caused by the hurry. … Communication is
based on informal occasions. And unfortunately it is also
coincidental.
The informants reported at least four kinds of problems in
management’s internal communication:
1) Most important decisions were made by the President
based on information she had been able to gather from the
organization. However the information required was
limited by the president‘s preferences and the information
provided was limited by the capabilities of the still
emerging organization. The whole process was limited by
overextended resources, especially time.
2) The clear overall picture of the goals and recent
developments was mostly shared only by the President‘s
Management Team (PMT). The communication of this
picture to the rest of the central administration was based
on members of the PMT informing their subordinates.
There were large differences to what degree this was done,
again limited by the time resource. Therefore many
managers within the central administration were not
certain of the overall goals.
3) As a result of problem 2, the managers that were not
members of the PMT had trouble in informing their own
stakeholders within and outside the organization. In worst
cases this could lead to sharing contradictory or outdated
information ‗on the field‘.
4) There was no established way for managers below PMT to
communicate and discuss with one another. Therefore the
sharing of the situational awareness between the different
responsibilities of the administration was based on
informal ad hoc communication, in some cases resulting
in ―right hand not knowing what the left hand was doing‖.
Change Context: Inertia in the Transformation 100
Internal political constraints
Internal politics play a part in any organizational transformation. In the
case of the Aalto transformation the politics seemed to emerge as three
themes: 1) the imperative of the management to win the support of the
academic community to make any tangible change possible, 2) the
transformation of the informal power structure, and 3) self-interests and
power battles between faculty members and organizational units.
The proponents and managers of the Aalto transformation saw the weak
leadership a critical shortcoming of the ―old system‖, and therefore
strengthening both academic and administrative leadership was one of the
key goals. Nevertheless, the informants had also a clear understanding that
this could not mean dictating an arbitrary change top-down, but for the
change to actually occur, it would need the support of the staff. This was
seen to be especially important in the case of the academic faculty, while the
management of the support organization was thought to be more
straightforward.
It‟s impossible to implement any change among the
professors. Any change has to originate within the ranks of
the professors themselves.
As long as people haven‟t emotionally bought all this, as long
we‟re not moving optimally towards the target.
Actually the faculty had two principal ways of shooting down a change. First
was that they could refuse to implement any new practices, or circumvent
rules for instance under the flag of ‗academic freedom‘. Therefore any
leader would need the support of his or her organization to get anything
done.
A leader may be nominated from above, but if he or she
wants that the troops will follow, the leader must also earn
their trust.
The second possibility for especially the best academics – as well as the best
students – was to simply go somewhere else if they disliked the
environment provided by the management. Many informants saw in
particular this second option, the best talents voting with their legs, a
serious threat.
101 Data and Analysis
In practice the ultimate power in a university lies in the
hands of faculty and students … Losing talent is the worst
thing that can happen to a good university.
If for instance the President wouldn‟t have the support of the
professors, she would be in trouble even though she‟s not
nominated by the professors. If you can‟t attract and keep the
faculty, they can always go somewhere else.
Obviously these requirements meant that any change had to result from a
process of negotiation between the management and the academic
community. However, a key issue here is how this negotiation could
actually be done in a university employing thousands of people, hundreds
of them professors. Apparently the top management had a simple method
for choosing whom to listen: they simply chose the professors who had the
most authority within the scientific community, which typically meant the
professors who were academically most distinguished. This approach
enabled the management to gain access to the informal power network of
the academic community, but also made the key academics working as
nodes in this system potentially powerful.
The power lies at the hands of opinion leaders and the best
researchers. If someone gets a Nobel prize or has extensive
co-operation with Nokia, he has also a lot of power.
The authorities are the top professors, and you always have
to listen to them. … When someone has a good competence,
you have to listen to and respect it. If someone doesn‟t have a
good competence, it should have its consequences as well.
The fact that distinguished academics had a lot of power in a university was
nothing new, of course. They had had power in the old system as well.
However, as the top managers of Aalto University had more power than
their predecessors, this meant that also the people who the managers
listened to became more powerful. On the other hand, some informants
also thought that the more straightforward leadership structure in Aalto
University would somewhat diminish the significance of behind-the-scenes
operations. Furthermore, the influential academics in the Aalto weren‘t
necessarily the same people who had had influence in the old universities,
which demanded a change in the informal power structure as well. It
Change Context: Inertia in the Transformation 102
is even possible that some of the feeling of powerlessness or chaos
experienced by some of the faculty during the transformation could have
resulted from the redefinition of the informal structure of the organization,
where the established ways of ―getting things done‖ were no longer valid.
I got the feeling in the old university that strong professors
talked with the president directly past the department
manager. And the department manager was informed if
someone remembered to.
We clearly went through a state where the informal decision-
making structures were reformed. … The most agile players
established their own informal organization for instance by
rebuilding their old relationship with some Board member,
or a member of the A8.
Finally, there was also a number of power games played between
different organizational units and also amongst the faculty. These
were most prominent between the old university administrations in
influencing the processes of the new university, and between the schools in
influencing the principles of resource allocation and how centralized the
management system should be. Also the trade unions and students were
accustomed to being involved in tripartite decision-making and had to be
kept calm. In many cases all sides felt that they had been somehow
maltreated while the others were favored. As a result the management
needed also political skills to keep the situation under control.
We‟re losing tremendous amounts of time in every single
matter, because everybody feels that some other school is
somehow favored or treated better than the others. (Aalto
manager)
Why is it so that we have to always change the system and
not the others? (HSE)
We feel that we have been the side that has had to give in all
the time. (TKK)
All-in-all the change meant configuring the organization again and
redistributing some of the resources, which meant more possibilities for
some and more limitations for others forcing a new balance of power.
103 Data and Analysis
We have had here some age-old conflicts gnawing between
people and between units, and now they all rise back to
surface because of this transformation.
External Legitimacy Constraints
As stated before, Aalto University would never have been created without
significant efforts of external stakeholders and consequently there were
tremendous expectations to fulfill. On the other hand, because the very
purpose of Aalto was to create something new and extraordinary, the
informants saw it to be somewhat free from following the established ways
of doing things in Finnish universities. These two conditions effectively
meant that to justify its existence and privileges Aalto had to invent
something new and couldn‘t keep doing the same thing as everyone else,
but the solutions Aalto came up with had to satisfy the expectations of the
various stakeholders. It could be almost said that Aalto was constructed to
change the rules of the game, but the paying audience expected the new
game to be better than the old. The setting is especially interesting from the
legitimacy perspective.
The most important dynamism was the legitimacy on the higher
education sector, where the key players were the universities and the
Ministry of Education. In relation to the other universities Aalto had two
contradictory roles. On one hand Aalto was spearheading a reform that
would enable all universities to gain more liberties from the government,
but on the other hand Aalto was the ‗spoiled brat‘ hoarding the resources
and talent from the others.
All universities are now seeking the limits how much
independence they can get and how they can run themselves
when they don‟t have to follow the government bureaucracy
any more. … Especially some smaller universities are
interested in how we do things here and are asking us to
share some of the new ideas.
We get feedback from the other universities that not only
have we taken all the money, but we have also screwed up all
their fancy systems, like “we have been building this new
salary model for 14 years and now you come and spoil it
with your local agreements”.
Change Context: Inertia in the Transformation 104
The Ministry of Education, as well as for instance the Ministry of Finance,
had similar dilemma in that the reason for creating Aalto had been to give
universities more freedom, but they still wanted to maintain control. So the
question was where the limits were, as Aalto tried to gain as much
autonomy as possible.
The Ministry of Education in principle gave us autonomy at
the university reform, but at the same time, for instance this
year, I think we have seen that they gave us leach but now
they have tightened it again. … They want to control us the
same way they control the municipalities.
As long as we are dependent on government funding, the
government decision-makers are an authority. We just have
to get along with them, and we are dependent on their
decisions.
Other important external stakeholders were the donators and the
institutions providing external research funding. All informants
agreed that the donators didn‘t have any direct effect on how things were
done in Aalto. In fact the informants didn‘t recall that the significant
donators would even have tried to persuade the university management.
Actually the donators did have influence, but this realized at a more
abstract level: the informants told that the donators simply wanted Aalto to
be internationally competitive quality university, and they wanted to ensure
that the ambition level of the management remained high.
The CEO level stakeholders just think that they need talented
workforce, but say that they don‟t have the competence to tell
us how this goal can be accomplished.
On the contrary, the traditional providers of external research funding,
TEKES, Academy of Finland and European Union, were seen to have a
great influence on the internal processes and focus areas of the university.
The university had to adapt to the whims of these institutions and follow
the trends in choosing the research focus areas. The funding system was
also regarded extremely bureaucratic and forced the university to allocate
significant resources to manage the application process.
105 Data and Analysis
[The providers of research funding] have incredibly
bureaucratic criteria. This money is by no means free but
you have to do a lot of work for it. Actually the cost of this
money is so high that only about half of it … ever ends to
funding the research and the other half is needed for running
this administration. … I would rather get rid of the whole
business.
When considering which operating models were deemed legitimate and
which were not, one has to also take into account the broader
international perspective. If Aalto was to answer to international
competition, it had to also benchmark this competition and try to adapt
internationally acknowledged best practices in addition to getting along
with its local stakeholders. The benchmarking was extensive during the
planning phase of Aalto project, and actually many European universities
were currently doing exactly the same thing as Aalto. Also elsewhere the
European universities were trying to reach the global markets, and were
looking for models in the apparently more successful American universities.
Going yet one step further, the Aalto University project has to be placed
in the context of broader national competitiveness, described by one
informant as follows:
Aalto is strongly involved in the national development of
Finland. For many reasons we have understood that the
production-based thinking won‟t keep this nation on its feet.
Then what is the option? Option is the information-intensive,
service-based thinking. Well, how is such thinking powered?
It is powered by basic research. Well, where is it done? It is
done in the universities. Well, what about our universities?
They haven‟t been shining too much lately. Well, what should
be done? How about if we put there more resources to make
them shine?
Limitations of Collective Rationality
During the planning phase of the Aalto project, coordinated by the Aalto
Transformation Team, the organization remained small and informal.
Often the processes were not very established and many members of the A8
also felt that the ownership of the project was more or less vague with no
clear leadership until the President could be nominated.
Change Context: Inertia in the Transformation 106 After the President had been nominated the construction of the actual
university central administration began with the President gathering a
management team around her. The construction work took its time with
much of the ambiguity of the earlier phases of the project still present, but
eventually the new leaders could be recruited and new management
practices established. The administration started to grow with explicitly
defined roles and processes.
This new system didn‘t share the ambiguous features of the A8, but
instead two new themes emerged from the accounts of the informants: 1)
concentration of power – a theme not present anywhere before, and 2)
slowness in decision-making – a theme the informants had earlier
described as characteristic for the old universities.
Ensuring that the Board of the university and the key academic leaders –
especially the President – would have sufficient freedom to act had been a
key goal for the Aalto Transformation Team. This power, enabling the top
management to really lead the university, was seen as an important asset
for Aalto in the competition against other universities. This goal was largely
reached and the new Universities Act made the concentration of power
possible.
As you know, we have a very clear governance model that is
based on excellent Board that has chosen an excellent
President, who then yields very extensive power. The
President then has all kinds of resources at her disposal.
However, after the system was in place, some Aalto top managers started to
also get some second thoughts if the model had gone a little too far.
It took me a long time to understand that the management
team actually doesn‟t decide anything. Actually we have two
levels where some decisions are made: the President and the
deans, with some department manager occasionally deciding
something.
I‟m thinking that this new model may have caused that a
way too many decisions are piled on the President‟s desk. …
All the significant decisions go to the President and only some
trivial matters are resolved elsewhere.
107 Data and Analysis
We were so relieved to get rid of the collegial decision
making, but it may be that now we are going at the other
extreme of the scale.
The President herself commented the system as follows:
There are an awful lot of decisions coming to this level. My
decision making is based on good preparation and facts. I
rarely make decisions based on instinct. … Of course I have a
vision about how to construct a good university, and it‟s
naturally a pretty personal vision, but I discuss it with my
management team because they are able to give me good
advice. It‟s possible to influence me with good arguments.
The extensive concentration of decision-making may have made the system
susceptible to for instance information constraints as described earlier in
this Chapter, but also caused delays as the President wanted to ensure that
she had the necessary information and understanding available before
making a decision. The situation obviously presented challenges for a single
individual to solve a vast number of issues through resolution (to use the
terminology of Cohen, March and Olsen as discussed in Chapter 3.2.7) and
made the system susceptible for decision-making through oversight.
However, the centralized model clearly reduced decision-making through
flight, which seemed to be a dominant model in the traditional collegial
system.
The concentration of power and decision-making may have caused some
delays in the management‘s capability to resolve issues in a dynamic
situation. The other important cause for the perceived lag in the system was
that as the organization grew and became more established, it gained more
of the traditional properties of the very system that the management tried
to reform, such as tendency to prefer talk over action and a need to get
everyone involved in decision-making. This was not surprising, of course, as
the organization had grown to its full size and most practical issues were
handled between the same administrators and academics as before the
transformation with very little time for any significant cultural change. That
was also the level where the top management had to implement their plans.
It was discussed earlier that the centralization of power in the top
management decreased the amount of decisions that were made through
flight, i.e. bouncing them back and forth between different decision-makers.
Change Context: Inertia in the Transformation 108
However, in the lower levels of organization this behavior did still happen,
although possibly not so extensively than in the old system.
We‟re discussing and discussing and taking something into
account or not taking something into account until finally
possibly reaching a conclusion or, more often, not having the
courage to decide.
There are things that have been waiting to be resolved since I
started here [almost a year ago]. And they are still waiting.
… It‟s one of the principal sins of such a professional
organization that we are afraid to make a decision until we
are certain that we are 100% right.
It should be remembered that the Aalto project was very complex and
actually it did progress very fast on many fronts. From the perspective of
the individual members of the university community, however, the change
process seemed often stagnated causing concern for the managers.
People say that it‟s better to do it well than fast. But the speed
would have some value as well. … We haven‟t yet fulfilled any
of our promises. There‟s quite a bit of frustration among the
professors.
Most of the talk has been about improving the research
support services and such practical things, but they have
been left as the last issues to be resolved. And these would
have been the issues through which it might have been easiest
to improve the spirits of the professors. … The big picture has
not been entirely under control.
Sunk Costs
In addition to the primary themes discussed above, also two secondary
themes with less yet still clearly observable support emerged from the
interviews. These were the sunk costs and limitations of learning.
Sunk costs represent quite an obvious source of organizational inertia.
Large investments made in infrastructure and personnel necessarily limit
the diversity of feasible alternatives in decision-making and make certain
strategic developments such as moving facilities or shutting down
operations with a large staff difficult. Therefore I did not deem the sunk
109 Data and Analysis
costs as especially interesting topic to discuss with the informants, but
because of its clear significance it was brought up by many informants and
it must be covered here as well.
In a university the cost structure has typically two dominant elements:
salaries and real estate costs. This is also the case in Aalto University with
almost two thirds of costs being salaries and almost one third being real
estate costs. Necessarily this means that significant changes in personnel
and real estate incur significant costs. During the Aalto transformation this
obvious fact converged into two main debates: 1) what would happen to the
administrative staff when the three old central administrations would
merge into one, and 2) what kind of campus structure Aalto University
should develop, with the three original main campuses scattered around the
Helsinki area.
Considering the personnel costs, naturally one of the reasons why the
change had to be pulled through by the old personnel was sunk costs. Of
course there was also irreplaceable competence within the organization and
several atmosphere-related reasons, but if the management wanted to affect
a major cultural change, in theory it might have been much easier if a
significant part of the personnel could have been replaced from outside by
new people with no previous burden of history. However, sunk costs made
such large scale changes impossible.
Building an organization has been also a painful process.
We have had three universities, the administrations of which
have had to be partially merged. It means that we have
people and we have jobs and these two would need to meet
one another. I don‟t know, and I don‟t know if anyone else
knows either, if all the people in administration and the tasks
we have to offer will meet one another.
Also here the model of a change curve adapted by the management
emerged. The management expected the personnel to go through a mental
change adaptation process with early descent into ―an abyss‖ of
demotivation and fear before overcoming the change and adapting to the
new status quo. However, they also expected that some minority of the
personnel might not be capable or willing to adapt to the new system,
arising the question what could be done about it.
You have to think what you will do with the people that will
stay in the abyss. Either you have to do everything you can to
Change Context: Inertia in the Transformation 110
help them up, or then you eliminate them, as often happens
in the corporate world. What causes the most damage is to
leave part of your organization there in the abyss, which will
ensure that you‟ll never get where you are going.
The other issue with the sunk costs was the costs associated with
infrastructure and specifically with the real estate needed by the
university. This discussion saw several twists and turns during the
transformation process, but some prominent elements were the issue about
creating a single Aalto campus in one place instead of three, the
construction of a new landmark main building for the university and using
the extra funding for creating more modern space for teaching and
research. The simplified main argument of the proponents of creating a
single Aalto campus by moving HSE and TaiK to TKK campus was that TKK
was so much larger that moving TKK would have been economically
impossible – essentially a sunk costs argument.
The discussion about constructing new buildings or refurbishing old
ones was part of a debate how Aalto should use its extra funding, and many
warned about spending the money that was meant to improve teaching and
research to non-essential construction projects.
[One of our Board members] always says that, god dammit,
don‟t spend your money to walls, spend it to people … to get
the best people to do the research.
The structure is always a product of history and we have
been investing very broadly into this research environment,
the maintenance of which incurs significant costs. It‟s very
hard to think how we could release resources from this
environment, because it is so difficult to see what we could
give up.
Limitations of Learning
In short, the limitations of learning experienced by the Aalto management
were largely the same as those experienced earlier by the Aalto
Transformation Team. Almost all senior executives were manning a post
that they had no previous experience of in any organization. Aalto was also
a new and unique organization in its early development with no one to ask
111 Data and Analysis
for previous experience of a similar project. Therefore there were
necessarily limitations in how much the executives could learn.
No one has been before a president, a vice-president,
everyone is doing what they are doing for the first time.
Many here hold for the first time such executive positions.
On the other hand the executives were very experienced, either in academic
world or as private sector professionals. Therefore their previous experience
dictated much of the models they followed and limited their capability to
come up with something entirely new, with a focus in applying existing best
practice models to Aalto context.
I don‟t have much ambition to try to come up with a unique
way of arranging this particular support service. Let‟s look
how the good universities have done it and just copy it. Just
like Stravinsky has said that minor artists borrow but the
great ones steal.
Change Context: Feedback from the Staff
The discussion about how the staff perceived the change would logically
belong here as the next Chapter. However, from the perspective of a change
effort coordinated by the management the staff had more the role of an
object rather than a subject, making it difficult to make a distinction
between the context of the change itself and the efforts of the management.
That is, effectively the efforts of the management were an essential part of
the change context as perceived by the staff. Therefore the leaders‘ response
and actions are discussed first in the next Chapter, before discussing the
perceptions of the staff in Chapter 5.4.
5.3 Leaders’ Responses
The theme of Chapter 5.1 was to provide insight into how first the Aalto
Transformation Team and later Aalto University management as well as
ordinary people working for the university experienced the status quo
before Aalto transformation. The structure of the chapter emerged from the
data with the perspective of organizational inertia in mind, but the essential
question answered in that Chapter was ―Why did Aalto come to be?‖ and
how can organizational inertia actually be seen as a driving force increasing
Leaders‘ Responses 112
the need for a new university. In Chapter 5.2 the key question was ―What
happened during the transformation process?‖ and how inertial
phenomena affected the change effort.
So the leaders of the Aalto project had an understanding about what they
were trying to accomplish, and they also observed a number of emerging
difficulties that made it more challenging for them to reach these goals. The
natural third question to answer is ―What did the management try to do
about it?‖ Answering this question is the purpose of this Chapter. A
question of equal importance is ―What the management did not do?‖
5.3.1 Leaders’ Responses: Planning 2007-09
The Aalto Transformation Team (A8) had a fairly unified understanding
about what they tried to accomplish as well as about issues that were
causing trouble during the transformation. Above all information
constraints, internal political constraints, internal institutional constraints
and external legitimacy constraints emerged clearly from the data as
serious causes of concern for the team. Naturally the A8 had to handle all
these issues at least on some basic level, such as taking care of necessary
communications, or taking into account costs sunk into infrastructure or
limitations in their own capability to learn. Therefore some of the response
was likely self-evident and thus not present in the data as an interesting
interview topic (it should be reminded that the interviews of A8 had been
conducted earlier by another researcher with another perspective). On the
other hand the data also suggests that some themes may be absent because
they were deemed ‗force majeure‘ by the informants and out of their control
(even if it wasn‘t necessarily so), such as external legitimacy constraints and
partially even information constraints.
However, two clear themes obviously highly relevant for the informants
emerged from the data: Internal political constraints and internal
institutional constraints. Information constraints and limitations of
learning emerged as secondary themes.
Internal Political Constraints
The project management tried to overcome internal political obstacles to
the change by various means, of which the most important were converting
respected individuals to support the cause, and encouraging commitment
through various means.
As almost all members of the A8 were already VP-level university
executives when they joined the team, they understood well the internal
dynamics of the academic community and knew that they had to gain the
113 Data and Analysis
support of the professors to get anything done. They also knew that on
the academic playground not all animals were equal, but some were more
equal than others, so to say. Therefore it was important to identify certain
key professors and try to get their support, or at least try to ensure that they
would not openly oppose the project.
It's imperative to find the change agents inside the
community. Even though the press has been saying that all
opinions are equally valuable, in reality they are not. Those
based on deep experience and good argumentation are much
more valuable than some first impression delivered by a text
message.
Converting opponents to our side, it's not power games,
politics or anything, but handling and manipulating people.
The project management had a clear understanding that even though it was
―their‖ project and they had to keep it moving, the real change would
materialize only if the university community as a whole would take the
change as their own. The management had to also take into account the
conversational tradition of the universities demanding a certain level of
involvement in everything that took place.
If we try to make all the decisions somewhere in the top, and
don‟t allow the people to influence anything, it‟s the biggest
possible damage we can do for the motivation of these smart
people, who think that they are even smarter.
The most important practical solution the A8 came up with for encouraging
the commitment was creating dozens of so called “theme groups”
contributing to the planning of practically all fields of the project. These
groups had hundreds of members and for some part their work was also
used as a starting point for future planning. However, the primary reason
for the groups was to facilitate commitment and communication.
It‟s a great challenge to find a position for everyone willing
to participate in the teams, because it‟s so important to get
people in. To create change agents inside the schools.
Leaders‘ Responses 114
There were also different discussion forums set up, where the project
management tried to gather and address concerns of the community.
Trying to get the wider community involved with the transformation was
not an easy task. Problem was that the message often depended on who was
asked, and the academic community and its sub-groups often had difficulty
in articulating what they wanted, which caused frustration in the project
management.
I‟ve given up trying to get inside the administration. Now I
just make my own decisions.
Internal Institutional Constraints
Another clear theme emerging from the interviews was that the project
management really wanted to combat the established institutionalized ways
of doing things. Essentially they advanced on four fronts: imposing a
cultural change, introducing new operating models, showing a positive
example, and trying to prevent a too early re-freezing of the organization
into a new form before the change had progressed far enough.
The most fundamental level of change was the cultural
transformation. This took many forms as the project advanced, but some
of the key themes were trying to replace ―controlling‖ by ―servicing‖,
encouraging risk-taking and multiculturalism, emphasizing separation
from the ―government bureaucracy‖, and underlining the value of teaching
and basic research.
We‟re going through a major change in mind set. This
university is about to rise the research and teaching to an
entirely new level, and all this other nonsense will be subject
to these main functions.
The cultural aspect of change was important also for the motivation of the
project management itself. Many commented that they were participating
because it was a chance to make history, and some even saw themselves
fulfilling a national mission. A story of Aalto was born from the language of
the cultural change, multiplied by especially the mass media. The A8 made
a conscious effort to keep the story intact by showing an external unified
image regardless of sometimes heated debates within the team.
In practice a new story wasn‘t enough, but A8 had to also come up with
practical new procedures. The themes that later became to characterize
115 Data and Analysis
the whole transformation story were already there: reducing bureaucracy,
strengthening leadership and emphasizing Aalto as an independent actor. It
was important to come up with even radical ideas to challenge people into
rethinking the institutionalized ways of doing things. In part the system of
the voluntary ‗theme groups‘ served also this goal, as it enabled the people
from the different schools to share their best practices. Effectively this
meant creating new institutions to replace the old ones.
Designing an administration is no different from designing a
“löylykauha”. The experience has to be positive, it has to be
understandable, it has to be clear.
As the project management was demanding something ―radical‖ and rather
ambiguous, it was necessary to show by their own example what they
meant with their transformation story. Eventually the informal work-
culture of the ambitious and interdisciplinary A8 had great symbolic value
for visualizing the change, and could even be seen as the original source of
many elements now considered to be parts of the Aalto image. A8 was also
necessary for creating momentum for the change with a ―yes, we can‖ –
attitude.
[The first offices of A8] didn‟t create a sense of doing
something top-notch. But the upside of the place was that it
forced these guys to really give up their cozy old offices in
their old universities. It was a strong symbolic signal of the
upcoming change.
How do you get things done? Saying that you‟re going to do
it anyway and asking the others to join you.
As the A8 observed that at least some parts of the organization slowly
started moving and the change effort gathered pace, they became worried
that the organization could ―refreeze‖ again before any significant changes
could really have been implemented. Therefore it was critical to get the new
key managers in place and to not allow for instance the old three
administrations to negotiate any new processes between themselves. The
project management also tried to prevent new procedures from emerging as
combinations of the old ones as long as there was a possibility of coming up
with completely new procedures.
Leaders‘ Responses 116
When the year changes, we have to contend with simply
combining old models on many areas. But it is a dangerous
thought philosophically, as it may prevent creating anything
new.
The project management actually went to great lengths to prevent the old
institutions from re-establishing themselves within the new university. One
of the principal reasons for disintegrating TKK into four separate schools
later during the transformation, for example, was to break down the old
institutionalized central administration, which otherwise would have
remained largely intact after the transformation.
Information Constraints
All informants were painfully aware of shortcomings in external
communication. Some thought, however, that not much more could be
done because they were working at their limits already and simply did not
have the time. Others thought that getting more communications
professionals to help would do the job. In any case the primary remedy for
trying to ease the communication pressures was encouraging the
commitment of the academic community, especially its key members, to the
project. This could mostly be accomplished only through personally
contacting the people, and on the other hand through the people‘s
involvement with the change effort such as the theme group organization.
The greatest challenge is how to get your message through
on a broad front and manage your time so that you can meet
the right people. Because sending letters and putting up web
pages aren't enough in this job, you really have to meet
people personally.
Considering the internal communication of the project management, it
seems that even within the small Aalto Transformation Team some
members were better informed and kept closer contact with one another
than the others. These members in general perceived no significant
problems in the internal communication of the project management, while
the other less informed members reported significant confusion in what
they were doing. In any case, the internal communication of the project
management was largely based on informal contact, and was made possible
by establishing a separate project office, where the A8 could do its work
117 Data and Analysis
together without being spread out across the campuses. In practice,
however, this did not solve all internal communication challenges as
eventually the participants did most of their work meeting people elsewhere
in the organization and had little time to be in contact with one another.
Limitations of Learning
There were three basic learning-based challenges that emerged from the
data: 1) the project management did not have all the necessary skills for
actually running or planning a university, 2) many solutions the project
management was capable of producing were based on their own earlier
experience, and 3) the project management had insufficient experience in
actual management of large projects and process design.
The informants recognized the first challenge, but were confident that
even though the A8 members were not specialists on every field, they still
had extensive experience, and as a whole the team was widely regarded as
the ―dream team‖ for the job: if they could not do it, no one could do it. The
same largely applied to the second challenge. The A8 tried to foster an
entrepreneurial spirit and atmosphere that would encourage fresh, even
radical, thinking and this seemed to succeed at least to a certain extent.
However, the strategic planning of the change effort was deemed an
overwhelming task and therefore the project management decided to use a
major international consulting firm to support in orchestrating the
transformation, to provide international benchmarking and to contribute to
the design of new processes and create presentations and other material.
Many of the informants were very impressed by the contribution of the
consultants in conceptualizing the change and facilitating the early stages of
the change effort.
Perhaps we should have been more reckless in spending
money to consultants who could have facilitated certain
processes more effectively. University people are lousy at it.
Some consultant could be here breathing on our neck every
week.
This contribution progressively decreased as the project started to take
shape. Different consultancies were used to support the project on selected
fields also during the later stages.
Leaders‘ Responses 118
5.3.2 Leaders’ Responses: Implementation
2009-
Based on the accounts of the informants, Aalto University Management had
identified several issues in the ―old system‖ that they wanted to resolve, and
the most significant were classified as internal political constraints, internal
institutional constraints and limitations of collective rationality in Chapter
5.1.2. Furthermore, the informants recognized several challenges to the
transformation process itself, with the most significant categorized as
internal institutional constraints, internal political constraints, information
constraints, external legitimacy constraints and limitations of collective
rationality in Chapter 5.2.2.
The data suggests that in tackling these challenges, the main response of
the management was focused on internal political constraints, internal
institutional constraints and information constraints. Sunk costs and
limitations of learning emerged as secondary themes in the leaders‘
response.
Internal Political Constraints
The new leaders realized that they would face internal political opposition
against many of the reforms that they struggled to implement. The
management responded by strengthening the leadership across the
organization, using their own power and resources to support initiatives
that were seen as beneficial for the transformation while denying support
from initiatives perceived to stall the reform, using change agents, and
trying to inspire commitment to the change in as much of the community as
possible.
During the earlier phases of the Aalto project most of the planners‘
attention was focused on developing the project management and the
support organization management. As the project advanced and Aalto
started its operations as a functional university, however, the focus
eventually turned on developing strategic and academic leadership.
We have been talking a lot about if it is possible to lead a
university. … And when you want to go where Aalto is going,
you‟ll have to lead. It‟s a different thinking and culture.
These universities are so large that you actually have to lead
them. You can‟t just administrate them anymore.
119 Data and Analysis
What is the point in having a common organization if you
don‟t have any common goals?
Here the key players were the President, the deans and the department
managers, who no longer received their mandate and therefore also its
limits from below through the tripartite democracy. Instead in the new
system the mandate came from above, from their own superiors, ensuring a
more direct chain of command and responsibility.
I think my mandate [as the President] to make decisions is
greater, because the mandate kind of comes from the owners
of this university, the responsible Board of the university.
The new deans have not been chosen by the traditional
selection method. Instead we have tried to find as good as
possible academic-, above all, leaders.
Department manager is a leader. He or she has the power to
say no, and it‟s not like before when you had to think about
the other guy in your team taking the manager‟s role over
after a couple of years, so better not upset him.
Both information and resources were supposed to move along this
straightforward chain of command, suppressing any informal coalitions or
other invisible power structures bypassing the formal organizational
structure. To compensate the extended power of the leaders, the idea was to
also make the leaders more accountable for their performance and make
replacing them easier to make the construction of personal kingdoms or
dynasties more difficult (see Mintzberg‘s power games in Chapter 3.2.3).
We have the strong President who uses her budgeting power
to distribute the money between the deans. She has also
announced that she won‟t control how the deans shall
distribute the money forward, but the deans distribute the
resources between the departments. And the department
manager then has the undivided responsibility for the
financial situation of the department.
In the previous system it was not very easy to dismiss for
instance the president as he was chosen through election. On
Leaders‘ Responses 120
the contrary, it‟s very easy to kick me out if I make some
serious mistakes. I have to have the support of the Board to
fulfill my task.
Even though the new leadership model was meant to give the key academic
leaders better tools for controlling the organization, the informants did also
realize that the particular characteristics and traditions of the university
environment had to be taken into account.
What we are trying to do is to develop a new leadership
model that fits into a university. It‟s completely clear that it
will be a combination of these old and new ideas, because
obviously we can‟t just copy and import our leadership
model from some big company.
In addition to strengthening the leadership across the organization, another
major approach for overcoming the political resistance was supporting
beneficial activities within the university, while denying support for
initiatives that were deemed to take the university into wrong direction. In
some cases it was enough to simply give permission and symbolic support
for ―Aalto-minded‖ activities, but the more powerful control tool was
resource control. The management also had the power to enforce rules
and policies.
The university is like a garden. We cannot grow the plants,
they grow all by themselves. But we have to put in the soil
and the fertilizer, and then we have to root out weeds to
make space for the nice plants, and use the pruning scissors
and such.
There were two kinds of important resource decisions that could be made:
budgeting decisions and recruitment decisions. In theory the budgeting
power made it possible for management to create focus areas within the
university or support certain broader trends, such as basic science against
applied science. In practice, however, the management understood that
such management through resources fitted very poorly in a university
environment.
121 Data and Analysis
One important driver is the message coming from the
university management, where the university is putting its
money.
If you ask our top researchers what they find rewarding,
they answer that resources to do their job.
Of course it won‟t work that way that the President would
define that these are the focus areas. Instead the focus areas
emerge bottom-up.
Therefore the most significant way of exercising resource control was
through recruitment decisions, making the new career system, the ‗tenure
track‘, perhaps the most important resource control initiative of the project.
By introducing a new career system the management created a new set of
rules how the internal competition of the university community would take
part, and which characteristics were the most valuable, renewing the scene
for the power games within the community.
The tenure track system is the most strategic initiative of this
entire reform, and the fate of the whole university depends
on how well the system works. … 2020 when all the systems
are finally ready and all the money has been spent and all
the people have been hired, everything is up to what kind of
people we have been able to hire.
Lastly, the management also recognized the importance of finding change
agents inside the community and encouraging commitment by trying
to get as many people as possible involved with the transformation effort.
It‟s of great importance that there are people who have
credibility within the community, and who want to believe
with their words and actions that this change is possible, or
at the very least that the change is a possibility.
The theme groups were valuable because they facilitated
internal cohesion of the community and encouraged people
to get to know each other. The results themselves weren‟t so
special.
Leaders‘ Responses 122
Internal Institutional Constraints
The management‘s effort to break and reform some of the institutionalized
behavior in the organization started with defining a new desired end state
that crystallized around a story of ―freeing‖ the academic community to
focus on teaching and research. Reaching the goal and gaining sufficient
momentum required the implementation of new processes and ways of
doing things, which were in practice accomplished by hiring new key
leaders from outside and reorganizing the responsibilities of existing staff.
The informants shared an ambitious vision of helping the Aalto
University to grow into something much more dynamic, competitive and
international than it had been. Many saw themselves as missionaries that
would just need to make the academic community to wake up, open its eyes
and unleash its full potential. Most informants saw that there was a lot of
talent in the organization but it was wasted because ―the way how things
had been always done‖ was often old-fashioned, bureaucratic and
ineffective.
We created a vision and an idea about building something
far enough from the present day, so that the mere setting of
the goal created movement and dynamics.
We have taken the people outside of their comfort zone, to
question the environment where they have been used to
work.
We don‟t use the argument “it has always been like this, so
we shall do it like this for all eternity.”
The uncertainty you see now in the organization tells that we
have been able to detach ourselves from the old world.
The story of ―freeing‖ the academic community to focus on teaching and
research was aimed at both the administration and the academics. An
important point here is that the informants saw these two groups largely
separate organizations, with the same mission but very different roles. The
main problem with the administration was seen to be the control culture it
exercised over the teachers and researchers making their life often more
difficult instead of helping them out. On the contrary, the issue with the
academics was the inability to focus efforts and lack of ambition. The
challenges of the groups were naturally interrelated.
123 Data and Analysis
Administration cannot be the primary function of this
organization, instead it has to be research, teaching and art.
We‟re not some police in here, we‟re here servicing the
teaching and research.
Administration or service organization is not the same thing
as the academic community. … The academic organization
does all the results and the purpose of the service
organization is to support it.
What this dualistic model meant, as some informants brought up, was that
the two organizations also had to be managed differently. Managing the
service organization was seen as straightforward top-down management,
while the key principle of managing the academic organization was the
academic freedom. As these two organizations had become largely
interrelated in the old system through the administrative control that
influenced many academic affairs, some change efforts of the new
management caused confusion. The management for instance talked about
increasing the academic freedom, but when they reshaped the
administration into more effective and straightforward direction, the
changes were interpreted by some academics to involve them as well and
saw the reform as an attack against the academic freedom.
The administration has to be managed top-down. You have
to be able to systematically implement changes, to define
processes and to build it to fulfill an exact mission. On the
other hand the primary way of managing the academic
organization is the tenure track, with a very different time
span.
The informants also brought up examples how the implementation of
new ways of doing things had advanced. On a more abstract level many
informants thought that the management had been largely successful in
revitalizing the environment and rehabilitating basic values and activities
like teaching and research. The more practical examples of successful
implementation involved issues like the successful establishment of certain
services, the ability of key executives to gather their own teams, the tenure
track system that had gained acceptance nationally, and certain test
Leaders‘ Responses 124
platforms with symbolic significance such as the new teaching and research
environment Design Factory.
All informants regardless of their background – academic or corporate –
saw the appointment of external professionals to key management
positions a crucial measure in the effort of changing the institutionalized
behavior. The same applied to the fact that the President and the first vice-
president had not held senior executive positions in any of the old three
universities. The new professional managers were seen to serve the goals of
the transformation by bringing in expertise rarely present in universities
and challenging the established methods and processes. Also the process
how the key managers were hand-picked for their tasks was expected to set
the standards for the renewed recruitment policy in Aalto.
If we would have just hired for instance our communications
director or finance director from some other university, I
think there would have been a strong temptation to continue
business as usual.
We have a new President and five out of six deans are new,
it‟s a major change.
An interesting detail was that the professional managers with a corporate
background saw their move from the private sector to a university as
something very unorthodox, underlining the special nature of the Aalto
project. They also shared the same ideology as the other builders of Aalto,
seeing themselves as taking part into a historic endeavor.
When I told people in my old organization that I was going
to move to Aalto, they asked me if I had turned mad. Who on
earth would leave the private sector to join a university?
As a member of the management team I want to influence
where Aalto is going … The structure of the organization, the
people who work here, and the strategies we use.
Some key managers could be recruited from the outside to facilitate the
change, but it was evident that for any transformation to actually
materialize, the people already working in the organization would need to
change their behavior. The management understood that it was an
impossible request to expect that people doing the same job with the same
125 Data and Analysis
people would all of a sudden simply start behaving differently, because the
management asked them to do so and changed the name of the
organizational unit. Therefore it was necessary to also reorganize the
responsibilities and tasks of the existing staff.
It‟s very difficult to behave differently if you have the same
people and the same structure. “I‟m the same person as
yesterday when we did business, but today I have a
completely new agenda.” We obviously have to get the
organization out of balance.
We have opened up new positions and people have applied
for them, and so we have enabled a large amount of
transfers between the schools and organizations.
Information Constraints
The informants recognized several limitations in both external and internal
communication, but the efforts to improve the situation concentrated on
external issues. A common attitude seemed to be that ―the communication
is imperfect, but we are doing our best, and not much else can be done‖.
Some of the practical themes that emerged as remedies were facilitating a
dialogue rather than one-way communication and telling the story by
promoting successful examples. Improving the communication was also
given as one of the motivators for building a matrix-form service
organization.
A constant dialogue between management and the faculty was seen as
the only beneficial way of communicating, with any top-down
announcements likely to face fierce opposition. Some informants perceived
that this was also an important contrast when compared to the old system
and had therefore symbolic significance, while others dismissed this notion
and simply saw the dialogue the only way of communicating in a university.
However, a lot of top-down announcements actually did take place, and
some informants also expressed their doubts that some ―Aalto liturgy‖ had
taken hold in the message of the management, decreasing rather than
increasing the management‘s credibility.
I wouldn‟t call it communication, which somehow reminds
me of some kind of propaganda or a dogma that you share to
the people. I would rather call it a dialogue.
Leaders‘ Responses 126
In promoting the successful examples and achievements of the Aalto
community the management tried to tell their favored story of Aalto
through tangible examples, and to simultaneously create a virtuous cycle to
power up the transformation. The management had also realized the
significance of external communications in internal communications, as
Aalto was closely followed by the national mass media. As the media had
after initial skepticism established a relatively positive attitude towards
Aalto, many of the published stories supported the management‘s goals of
inspiring and empowering the community and created an air of rapid
development, even if on many fields the actual progress was much slower
than could be understood from the media reports.
Thank God we have the Design Factory. We have something
concrete, new, different. Without it we would be a little
helpless when people come to see what we are doing
differently in Aalto. We would have nothing else to show than
some powerpoint slides in old lecture halls about what we
are intending to do. But there you can see and experience and
sense the new culture.
Interestingly, some informants brought up the new matrix organization
as a tool for improving communications. The point was that as the service
organization had been constructed in matrix form with service personnel
responsible both to their superior in the service organization and to their
superior in the academic organization, it made it impossible for the service
professionals to make decisions and plan reforms without consulting the
academics. The organization was also intended to reveal any conflicts
within the organization, without burying them behind the scenes of a
faceless administration, promoting transparency.
In a matrix you cannot live like in a strict line organization,
where you say that “my responsibility ends here, I take care
of only these bullet points”.
Sunk Costs
The new management was well aware that the large overheads associated
with infrastructure and personnel costs of a university – typical sunk costs
– limited the feasible options for reshaping the organization. Nonetheless,
they made a serious effort to renew some visible elements where the culture
127 Data and Analysis
and power structure of the old system had become embedded in the
everyday work environment. These elements with symbolic significance
included issues like the office layout illustrating the authority of executives,
decoration of offices symbolizing power and long history, and a general
formalism encouraging for instance the use of people‘s last names instead
of first names when referring to someone. The new management could have
for instance taken over the TKK central administration and turned it into
Aalto administration, but instead chose to use a significant amount of time
and money to construct a new environment visualizing the new
culture elsewhere.
I‟m trying to show that the size of your office doesn‟t tell
anything about your influence.
There‟s been a lot of management by fear.
The formal authority is empty, it‟s incredibly old-fashioned,
you can‟t get very far with it.
As some of the old symbols of authority were brought down, the
management had to try to redefine the desirable new end state through
their own actions, realizing that the structures and actors of the early
days of the new organization would have a significant and long-
lasting legacy. This further amplified the need to find a like-minded team,
―a coalition of the willing‖, with the energy and ambition to see that the
transformation would meet its goals. Both the Aalto Transformation Team
and Aalto University top management satisfied these requirements, with
the shared dream ensuring homogeneity of the key players, who also largely
defined their own goals. The homogeneity attracted like-minded and
repelled critical voices, who either avoided the change effort altogether,
were kept away from key positions, or left the project when they noticed
that the critical thoughts were not welcomed.
I expect us to create an outstanding work culture here in
[Aalto central administration]. Such work culture that we
can proudly spread to the schools and from there to the
departments.
Sharing a dream binds the people working with this project
together. It binds the people who sacrifice themselves even on
Leaders‘ Responses 128
the level of feelings for this goal. This brings the risk that you
can also get insulted on the level of feelings.
X became a little side-lined when he started to question if
there was any sense in what we were doing.
Especially in the earlier phases of the project, it was also evident that people
participating in the effort were the key, not how these people were
organized. This contributed to the birth of certain idiosynchronic jobs,
where some of the participants effectively shaped their own job descriptions
according to their own ambitions and abilities.
Limitations of Learning
Finally, the Aalto management knew, as did the Aalto Transformation
Team, that they did not have all the necessary experience to take them
where they wanted to go, and on the other hand the experience they had
limited the set of solutions they were likely to come up with. An obvious
solution for tackling both these challenges was the hiring of the external
professional managers to take the lead on certain key areas and to bring
their input to the discussions of the top management.
Another source of skills and knowledge was the academic expertise
within the own university, especially on such relevant fields as strategy,
management, leadership and work psychology. As most of the Aalto
management had not been deeply involved in major organizational
transformations before, some professors could contribute by giving a
broader perspective to the change effort and explaining typical
organizational phenomena.
If I have written a pile of articles around the world about
strategic alliances, and nobody asks me anything when we
are creating a strategic alliance, it‟s pretty stupid because I
could probably tell you something about it. Similarly if
someone is making something out of cellulose, perhaps it
might be a good idea to ask the cellulose professor about it.
Also the external professional managers brought some theoretical
models with them, defining the language for the management‘s discussion
about the change. Creating an entirely new and unique organizational
model from a scratch was considered unrealistic, because it was difficult to
129 Data and Analysis
learn fast enough to be able to build a system that would be better than the
old one. Instead it was more feasible to create a model based on existing
theory, and try to adapt this model to the actual environment of the Aalto
University.
We look for theoretical models that could work in this kind of
environment. Then we can start moving forward from some
basic general model that we have taken from the literature or
somewhere, and begin to build elements that have worked
here in some earlier situation, or that some of our professors
have been doing in the corporate world.
Change Context: Feedback from the Staff – Fears and Resistance
130
5.4 Change Context: Feedback from
the Staff – Fears and Resistance
The previous Chapters have introduced already several aspects of the
available research data. The emerging framework of organizational inertia
and the aggregate dimensions of Triggers of Change, Change Context and
Leaders‘ Responses have followed through the chapters, while the
perspective has changed according to the primary data source from Aalto
Transformation Team to Aalto University management and to feedback
from the staff. These chapters have been an attempt to describe what the
management has tried to accomplish, what challenges they have faced and
what they have done to overcome the challenges. However, as one manager
put it:
The transformation has to have a clear positive effect on the
departments, the infrastructure, and the personnel. That is
the reality check – if we can‟t show any progress there,
there‟s no point of doing this. Then we should not have done
this. If we only build the façade, a fancy graphical outlook
and cool events, then we are on a very thin ice and will face
the fate of the Irish national economy.
Therefore it was important to look into how the staff was experiencing the
change. Chapter 5.1.3 also looked into the hopes and positive expectations
of the staff in order to figure out if the management was responding to an
actual demand. Putting together all the previous Chapters 5.1-5.3 a picture
of the transformation effort emerges. The purpose of this final Chapter is to
look into what kind of inertial elements seemed to emerge from this very
effort, namely the actions of the management. Therefore ―the management‖
in this chapter means both the Aalto Transformation Team and the Aalto
University management, although earlier it referred only to the latter.
Again it should be remembered that the feedback material was originally
collected for the purpose of giving the personnel a chance to express their
concerns regarding the change. The structure of the chapter follows from
the structure of the earlier chapters, as the perspective is how the staff
experienced the management‘s actions. However, the feedback from the
staff was gathered in late autumn 2009, a year before the interviews of the
Aalto University management, and before the management had been fully
assembled. Therefore the relationship between the actions reported by the
131 Data and Analysis
management and the staff feedback is not causal, but rather two different
perspectives on the same themes.
As the management concentrated most of its efforts into overcoming the
information constraints, internal political constraints, internal institutional
constraints, and external legitimacy constraints, it should be expected that
these themes are strongly represented in the staff‘s comments as well. This
is indeed the case, excluding the external legitimacy constraints, as these
actions were aimed outside the organization and did not therefore directly
affect the personnel.
Information Constraints
Communication challenges were the shortcomings that the management
was most willing to admit at all phases of the transformation. A lot of effort
was put to improve the communication, but still the main focus was in
doing rather than in telling what was done, and the time was the scarcest of
resources. There were a few units that reported that they were happy with
the information they got and knew what was happening, but the
overwhelming majority of the units across the entire organization from
administration to academic units reported some degree of discontent with
how the change process was communicated. The most general type of
critical feedback was that the people simply did not understand what was
going on, and how the change would affect them personally.
The management had made creating a strong and compelling change
story a priority. According to the feedback, the story was actually very well
received in general, with the goals seen as good and ambitious. However,
the story seemed to also slightly backfire, because many units pointed out
that most communication was very high level and abstract, with
information about acute practical issues nowhere to be found. This applied
to some degree also to the new strategy that a few units commented to be
complex and difficult to understand, leaving the goals of the project unclear
and vague for some. There were also comments that even though the story
was nice, it would have been better to see some successful examples
explaining what the change meant in practice – a concern shared also by
the management.
Our people feel that they are complete bystanders in the
Aalto project, if they are informed about decisions only after
the decisions have been made, and no chance for discussion,
Change Context: Feedback from the Staff – Fears and Resistance
132
comments and orientation is given during the preparation of
the decision.
The goals are vague. Strategy should not be just a list of good
things but there should be courage to choose what not to do.
The perceived communication problems were amplified for several reasons.
First, the management tried to share information by meeting people on the
field, but there were only a few managers and thousands of people in the
organization. Furthermore, the internal situational awareness of the
management was often less than perfect, meaning that the message carried
by different managers might vary. Second, there was great variation in how
much of help the established academic and administrative leaders through
the organization were. Some tried to cooperate the best way they could, but
didn‘t get sufficient information from the Aalto management to share it
forward, while others were unwilling or incapable of helping the change
effort. Naturally there were also successful examples. Third, the staff often
reacted to the information shortages by trying to contact the Aalto
management directly, but these efforts were rarely successful as the
management was overstretched with their duties. As a result there was
increasing frustration and discontent in the staff, with many units
commenting that Aalto did little to respect its own values that included
openness. Some of the sharpest critique was aimed at the Aalto University
Board that disclosed little to none of its decisions or discussions to the
public.
Transformation process is secretive and closed, staff is left
out.
Management is invisible and impossible to contact, contact
attempts are not responded.
The communication shortcomings also sparked some comments about the
lack of professionalism of the management. However, likely the most
serious problem was that there seemed to be an extended period during the
critical phases of the transformation, when rumors and gossip dominated
as a primary source of information instead of facts.
133 Data and Analysis
Internal Political Constraints
From the very beginning, the management was well aware of the
significance of internal politics involved in the change effort and stated that
for the transformation to be successful it would need the support of the
academic community. The management tried to facilitate the commitment
of the staff by arranging discussion events and creating the theme groups to
support their own planning, and recruited change agents and tried to
strengthen the leadership across the organization.
The feedback from the units suggests that the management‘s fears of the
scale of the internal politics and power games were well founded. There was
huge heterogeneity across different units and organizational functions, with
the most units mainly concerned how they would succeed in rivalry against
others within the same university. The smaller schools were concerned if
they would get enough power to manage their own affairs, and complained
that all the decisions were made in Otaniemi campus where TKK and Aalto
central administration was located, and the other two campuses had no
other role than following the orders. There was also suspicion that the
resources would not be distributed ―fairly‖ between the schools, with some
even claiming that the recent Research Assessment Exercise had been
―politically motivated‖ and now Aalto was using the results to make
―wrong‖ resource allocation decisions. The administrative units were
complaining that they had to adapt to the processes of other schools, and
there were even some academic subunits of the departments that wanted to
send their own feedback because they felt that they were so different from
their department that they could not get their feedback through that way.
Will HSE be forced to decrease its quality so that all the
schools can start from the same level?
We feel that we are sidelined and marginalized in our
department both in the planning of teaching and in the
distribution of resources.
Moreover, the only division did not go along the unit boundaries but also
along the different personnel groups, such as professors, other academic
staff and support staff. The management had promoted the tenure track
career system as perhaps the most important improvement brought by
Aalto, but in the first phase the system was opened only for researchers.
This sparked bitter comments from the excluded personnel groups that the
system encouraged inequality and most of the staff had been abandoned by
Change Context: Feedback from the Staff – Fears and Resistance
134
the management. There were also concerns how the representation of
different personnel groups would be taken care of in the university
administration, because, unlike earlier, all the representative councils of
Aalto no longer had mandate seats for all the groups as in the old tripartite
system.
There are no seats for all the subgroups of personnel in the
council, will this cause tensions between the groups?
Some of the lectors are worried about the distribution of the
seats in the council, because the professors are getting 5 seats
out of 11 while the lectors have room only among the 3 seats
reserved for other personnel.
The professors think that the aforementioned distribution of
seats is satisfying, with them carrying the heaviest burden of
responsibility.
There was also feedback commenting the change effort itself. The
management had emphasized encouraging involvement and commitment
of the academic community to the change effort. It seems, however, that the
efforts did not satisfy everybody, as the process faced a lot of criticism
especially from the TKK and HSE administration, as well as from certain
academic units. Many administrative units complained that their expertise
had been completely ignored, while others called encouraging staff‘s
involvement just a façade.
Our opinion has not been listened to, or at least it has not
been heard.
Internal Institutional Constraints
The management had set a cultural renewal one of their key targets,
questioning the established ways of doing things and enabling the
implementation of new processes and procedures. The new system was
supposed to mean more academic freedom, less bureaucracy and
professionally arranged support services for the teaching and research. This
goal was widely accepted and supported in the academic units. In many
units the efforts of the management to empower people seemed to bear
135 Data and Analysis
fruit, with comments lauding the transformation process as inspiring and
the new administration as more professional. Even some administrative
units that were in general very negative admitted that the new co-operation
within administration was a positive trend, and that Aalto was a good
―excuse‖ for improving internal processes. In some units the spirits were
high enough to repeat the message that the management was most eager to
hear: ―We will create Aalto.‖ Despite the fact that most of the staff was
actually still excluded from the tenure track career system, it was perceived
to facilitate more professional and better quality research in general.
Not all were expecting for the things to change for the better, however.
Some academic as well as administrative units pointed out that the culture
of efficiency and strong leadership fitted poorly in a university. Concrete
plans and more practical decisions were expected, and some were worried
about the current good practices and if they would be ―sacrificed to the altar
of harmonization‖. It was also pointed out that the management wanted
change, but failed to explain what exactly was wrong with the present
situation. Some of the new procedures had also not been completely
planned through or were vaguely communicated, which gave rise to
concerns if the new processes would do more damage than good.
How can we prevent mistakes in decision making if there are
no more officials with the responsibility for the legality of
their actions.
The new career system should be an opportunity, not a
threat to people who don't fit the model.
The management had wanted to recruit external professionals for certain
top management positions exactly because they wanted new input with an
external perspective to challenge the internal institutions. This move
backfired especially in certain administrative units, where the closed
recruitment process with no possibility for the internal applicants to apply
for the positions was used as an illustrative example of the lack of
transparency and non-conversational leadership style of the top
management.
The method of silent recruitment has been experienced as
regrettable and demotivating, as we don‟t even know which
posts are open to be filled.
Change Context: Feedback from the Staff – Fears and Resistance
136
Another source of great doubts was the management‘s promise of
decreasing bureaucracy. Few units had yet witnessed any change to the
better, and the fact that TKK still remained as a huge school with its own
complex internal structure under the Aalto umbrella meant that from the
perspective of TKK units, the university was actually even more
bureaucratic and distant than it had been before. The feeling was shared in
previously independent HSE and TaiK, but in TKK units the whole TKK
level of the organization was widely regarded as obsolete and unnecessary.
As of 2009 there were also few signs of the promised extra resources, and as
most of the news was about the building of the central administration,
many units believed that actually the new central administration spent
most of the extra money.
All kinds of measurement and assessment seem to be
increasing instead of decreasing.
The suggested administrative structure feels heavy, binds a
lot of resources and widens the gap between management
and teaching- and research units.
TKK was broken down to four schools based on the four TKK faculties in
the end of year 2010.
Sunk Costs and Limitations of Learning
In addition to the primary themes mentioned above, there was also some
evidence of staff‘s response to the management‘s efforts to curb the inertia
caused by sunk costs and limitations of learning.
The close-knit management team had generated a strong transformation
story and wanted to catalyze the change with their energizing example.
Despite the generally positive response, there were still many that saw the
management‘s efforts as ―lots of talk, little action‖. Especially within the
administrative staff the management‘s ambition, drive and small attention
to the past created also a feeling of inadequacy as well as insecurity over
personal employment. As a result of a number of major earlier
transformations just recently e.g. in TKK, there was also growing weariness
towards yet another transformation both in academic and administrative
staff. The transformation also created a lot of extra work for the
137 Data and Analysis
administrative staff, causing many to complain that they were
―overwhelmed‖ by the change.
Couldn‟t you just leave us alone and give us a chance to
concentrate on our real jobs?
Concerning the limitations of learning, especially many academic units
expressed their support for the professional managers with corporate
background, but underlined that the new managers would have to learn
how things were done in a university. However, some units expressed that
they were also ready to learn from the external experience. Another
learning-related issue was that some units commented that they were eager
to develop their practices, but that ―it was difficult to be creative in the
middle of a terrible hurry‖. The management was frustrated that it was
difficult to get much of the staff involved with the change effort, but
possibly the extra administrative work caused by the uncertainty of the
transformation was a factor limiting the possibilities of the staff to
contribute even if they would have wanted to.
The professional managers from outside don't have a deep
understanding of the academic world, cooperation requires a
process of mutual learning.
5.5 The Relative Significance of the
Emergent Themes
Based on the analysis in the previous Chapters, it should be clear that the
Aalto transformation was a very dynamic and occasionally even ambiguous
project, with the goals, perceptions and responses constantly on the move.
The dataset makes it possible to discuss the differences in what were the
challenges of the old system that Aalto tried to solve, what were the
challenges emerging from the transformation effort itself, and where did
the management concentrate its efforts.
The relative significance of the different themes in the data is portrayed
in Table 6. Themes with strong support in the data are classified as
‗primary‘, themes with moderate support in the data as ‗secondary‘, and
themes which barely emerge from the data as ‗tertiary‘. If there has been no
clear evidence for a particular theme, the theme has been marked as ‗-‗.
The Relative Significance of the Emergent Themes 138 Table 6: The relative significance of emerging themes
1. Planning phase 2007-09 Aggregate Dimensions
Second Order Themes
A) Triggers of Change: Inertia in the old system
B) Change Context: Inertia in the Transformation C) Leaders' Responses
i) Sunk costs 1.A.i) Tertiary 1.B.i) - 1.C.i) -
ii) Information constraints 1.A.ii) - 1.B.ii) Primary 1.C.ii) Primary
iii) Internal political constraints 1.A.iii) Primary 1.B.iii) Primary 1.C.iii) Primary
iv) Internal institutional constraints 1.A.iv) Primary 1.B.iv) Primary 1.C.iv) Primary
v) Barriers of entry/exit 1.A.v) Secondary 1.B.v) Tertiary 1.C.v) -
vi) External legitimacy constraints 1.A.vi) Primary 1.B.vi) Primary 1.C.vi) -
vii) Limitations of collective rationality 1.A.vii) - 1.B.vii) Secondary 1.C.vii) -
viii) Limitations of learning 1.A.viii) - 1.B.viii) Secondary 1.C.viii) Secondary
2. Implementation phase 2009- Aggregate Dimensions
Second Order Themes
A) Triggers of Change: Inertia in the old system
B) Change Context: Inertia in the Transformation C) Leaders' Responses
i) Sunk costs 2.A.i) - 2.B.i) Secondary 2.C.i) Secondary
ii) Information constraints 2.A.ii) - 2.B.ii) Primary 2.C.ii) Primary
iii) Internal political constraints 2.A.iii) Primary 2.B.iii) Primary 2.C.iii) Primary
iv) Internal institutional constraints 2.A.iv) Primary 2.B.iv) Primary 2.C.iv) Primary
v) Barriers of entry/exit 2.A.v) - 2.B.v) Tertiary 2.C.v) -
vi) External legitimacy constraints 2.A.vi) Secondary 2.B.vi) Primary 2.C.vi) -
vii) Limitations of collective rationality 2.A.vii) Primary 2.B.vii) Primary 2.C.vii) -
viii) Limitations of learning 2.A.viii) - 2.B.viii) Tertiary 2.C.viii) Secondary
3. Feedback from the Staff 2009 Aggregate Dimensions
Second Order Themes
A) Triggers of Change: Inertia in the old system - Staff's hope for a better future
B) Change Context: Inertia in the Transformation - Staff's fears and resistance
i) Sunk costs 3.A.i) Primary 3.B.i) Secondary
ii) Information constraints 3.A.ii) Tertiary 3.B.ii) Primary
iii) Internal political constraints 3.A.iii) - 3.B.iii) Primary
iv) Internal institutional constraints 3.A.iv) Primary 3.B.iv) Primary
v) Barriers of entry/exit 3.A.v) - 3.B.v) Tertiary
vi) External legitimacy constraints 3.A.vi) - 3.B.vi) Tertiary
vii) Limitations of collective rationality 3.A.vii) - 3.B.vii) -
viii) Limitations of learning 3.A.viii) - 3.B.viii) Secondary
139 Data and Analysis
As a disclaimer it must be remembered that the absence of a certain theme
from the research data does not necessarily imply that the theme would
have been absent in reality as well. The informants have had the chance to
withhold information at their discretion, and some themes may have been
left underemphasized simply because they have not been considered
relevant or interesting by informants and interviewers. However, the
themes identified as important by the informants should be appropriately
presented.
Significance of internal political and institutional constraints.
Internal political and institutional constraints were easily the most
prominent themes emerging from all sets of data and during all phases of
the transformation. They emerged as primary goals and issues that were
tried to be solved by the Aalto transformation as well as strong forces
making the life of the change leaders occasionally very difficult. Accordingly
the management also aimed the blunt of their efforts to resolving these
issues. From the staff‘s point of view these managements‘ efforts were the
source of much of the stress and opposition of the change effort as the
traditional institutions and informal political structures were challenged.
However, at the same time the staff recognized many of the shortcomings of
the institutions of the old system and many were actually looking forward to
the change, almost any change.
Information constraints caused by the transformation.
Information constraints were a major issue causing challenges for the
management, and much of the change efforts were focused in trying to
improve communication and gather better information to support decision-
making. However, the information constraints did not emerge from any
dataset as a significant issue in the old system, so it seems that
communication was a very change management related issue. Nevertheless,
this could easily be interpreted by the academic community so that
communication in Aalto University is worse than in the old universities,
which could have negative long-term consequences. The more centralized
decision-making system with less members of the academic community
directly involved in the decision-making and access to first-hand
information may have contributed to the shortcomings perceived by the
staff.
External legitimacy constraints perceived as a force majeure
or a tabu? The external legitimacy constraints emerged as a strong theme
characterizing both the goals of Aalto as well as the change process itself.
The management identified the strong pressure and influence of external
actors towards Aalto. Interestingly, based on interview data, the
The Relative Significance of the Emergent Themes 140
management did nothing to the situation, implying that the externally
imposed constraints were recognized as a force majeure that the Aalto
simply had to take for granted. However, based on secondary information
sources outside the interviews, it is likely that Aalto management actually
contributed significant efforts to trying to change the external institutions,
all the way down to trying to customize the reformed legislation to the
needs of Aalto. Based on favorable changes that actually took place in the
environment, this is the more likely case. It would suggest that the
managers were relaxed to disclose their opinions on the internal state of
their own organization, but the external issues were a tabu or a ‗trade
secret‘ that was not wanted to be documented in any study.
Limitations of collective rationality escaping the attention of
the managers. Issues related to the limitations of collective rationality
emerged as a significant theme explaining phenomena both during
planning and implementation phases of the project. However, there was no
evident management response to these themes. This should not be
especially surprising, if the issue really is the shortcomings of the
management‘s own rationality making the phenomena by definition
difficult to identify. The other explanation is that the informants feared that
suggestions for correcting measures would be interpreted as a critique
towards their own team.
Sunk costs and barriers of entry/exit are not interesting.
Regardless of their economic significance, sunk costs and barriers of
entry/exit emerged only as secondary themes at their best from the data.
The lame appearance would suggest that either the managers feel that these
issues are so obvious that there‘s not much to discuss about them, or then
the academic managers simply are not very interested in economic issues.
Especially the last notion might have significant implications to decision-
making in a university if it is true, but any such conclusions would require
further studies.
141 Discussion
6. Discussion
This final Part of the study begins with a discussion of the findings in
Chapter 6.1. I present a critique and suggestions for further research in
Chapter 6.2, and the final conclusions follow in Chapter 6.3.
Due to the broad scope of the observed phenomena and the resulting
wide array of necessary interpretations, this discussion is not meant to be
exhaustive. Rather my purpose is to highlight some representative
observations as a starting point for interpreting the literature reviewed in
Chapter 3 and the empirical data presented in Chapter 5.
6.1 Organizational Inertia in Aalto
University
The starting point of this study was the expectation that organizational
inertia would play some kind of role in the examined merger of TKK, HSE
and TaiK to become Aalto University. Returning to the old debate between
adaptation and selection (inertial) camps discussed in Chapter 1.4.5, it was
never claimed that adaptation would not have happened in the studied
transformation, or even that the inertial forces would have been more
significant than adaptive capabilities. My claim has been simply to examine
the inertial side of the story and leave the adaptive perspective for others to
explore.
Be that as it may, but I claim that based on my empirical evidence there
is ample proof of diverse and significant inertial phenomena in this
particular merger. The inertial forces played a part not only in complicating
the top-down controlled change effort, but they significantly contributed to
the perceived shortcomings of the pre-merger status quo as well, therefore
creating a rationale for the change effort itself.
6.1.1 Sunk Costs
Although one of the less prominent themes in the study, some interesting
conclusions can still be drawn from the more elaborate sides of the sunk
costs.
On a basic level, it can be said that sunk costs represented an obvious
source of inertia during the change. Compared to the more elusive themes
of inertia, basic resource-based sunk costs can also be easily understood by
common sense. This brought sunk costs –related issues to the spotlight of
public debate during Aalto transformation, which was evident for example
in the heated discussion about what kind of campus structure Aalto should
Organizational Inertia in Aalto University 142
have. Sunk costs –arguments dominated also the numerous ‗synergy‘ –
debates about finding savings through merging the support functions,
which caused concern and major insecurity especially in the administrative
staff.
More interestingly, it seems that the sunk costs contributed to the
change resistance of administrative staff also on personal level. In line with
the findings of Inchniowski and Shaw (1995), it seems that the personal
investment of individuals to organization –specific and task-specific skills
that were previously highly valued and that had taken a long time to
accumulate might have made it rational to oppose Aalto transformation.
This would not have been as important in any transformation, but because
Aalto was labeled as the vanguard of a national reform, there was a risk of
nation-wide degradation of prestige and career possibilities for the old-
school professionals if Aalto would be successful in redefining which skills
were valued and which were not. To a certain extent it may be that the same
argumentation would apply also to certain academics representing the
more applied fields of science that turned hostile against the change when
the new management started to emphasize the value of basic research over
applied research.
Another interesting notion is the valuation of mental and symbolic sunk
costs over physical costs. Even though there were significant resources
bound to the old infrastructure, the new management deemed that there
were so many invisible controls embedded in it (Scott, 2003: 317), that it
was more reasonable to create completely new ―Aalto space‖ than try to
convert and refurbish something old.
6.1.2 Information Constraints
Not surprisingly for a major change effort, information constraints emerged
as one of the dominant inertial themes characterizing the whole
transformation. This was further underlined by the fact that information
constraints was the only primary theme emerging from the study with no
evidence suggesting that communications would have been a particular
problem before the transformation effort began.
The management was successful in creating a compelling vision of the
desired future state of Aalto University that was widely accepted by the
faculty, amplified by the national media distinguishing Aalto from the other
universities, and ensuring Aalto privileges in funding and regulation. An
ambitious vision worked also as a driver for the managers themselves, and
attracted talented people to join the effort. However, the transformation
story had one major flaw. One of the most significant early goals of the new
143 Discussion
management was to transform the university administration, and because
this had to be accomplished mostly with the existing people, it was
necessary to win the support of the administrative staff. But the
management was unable to create a story that would have empowered the
administration, instead the story stigmatized the old administration as a
failure that had to be repaired, and the message received by the academic
units was that they would be ‗freed from the old administration‘s
oppression‘. Unavoidably this failure in creating a more balanced story was
a source of deep insecurity and open opposition to the change in the old
administrative units. This negative effect may have been even more
significant because the data suggests that the administrative staff may in
general identify itself more closely with the organization than the academic
staff that often sees the organization as a simple utility.
Another major set of information constraints evident through the
transformation was the selective perception and exposure to information
caused by the goal displacement of sub-groups within the organization
(March and Simon, 1958: 150-158). In the case of Aalto transformation the
issue was not so much the creation of new such sub-groups, because most
of them were inherited by Aalto from its predecessors (notably the three
original schools themselves), but the very diverse goals and perceptions of
the existing groups. The only significant new sub-group of the organization
was the Aalto management itself. There was no major change in the goals
and perceptions when the sub-groups were formally integrated into a new
organization, meaning that the content of in-group communication
remained very selective. Therefore a homogenous message sent by the
management was interpreted very differently in different parts of the
organization.
Neither can the significance of information as power be downplayed.
There is no evidence that the management would have used withholding of
information as a source of power on purpose (Aldrich 1999: 153). However,
it is evident that the de facto decision to exclude the boards and presidents
of TKK, HSE and TaiK from the strategic discussions in Aalto
Transformation Team and Aalto University foundation Board meant the
takeover of the old universities under a new jurisdiction, regardless that the
old institutions were required to formally approve certain decisions. A
similar ‗information coup‘ took place when the new Aalto management
announced that they would inform the administrative units how the
administrative processes would be structured. The other option would have
been allowing the old administrations to negotiate a new structure that
Organizational Inertia in Aalto University 144
would then have been assigned under a new manager, but this solution
would have left the power of information lower in the organization.
Many writers (e.g. Cohen, March and Simon 1972, Hannan and Freeman
1977, Aldrich 1999 and Scott 2003) suggest that the partially irrational
internal information processes in expert organizations such as universities
make them especially prone to defective decision-making processes.
Without doubt the collegial decision-making system in the old system had
serious flaws. However, the centralization of power, lack of established
processes and fatigue made information processing capabilities a critical
issue for the Aalto management. The empirical evidence suggests that
optimism, overconfidence and selective use of information degraded the
management‘s situational awareness during the early phases of the project.
It should be also be recognized that the social reality created by the early
Aalto actors, especially the Aalto Transformation Team, set strong
limitations for the later actors, such as Aalto University management, to
interpret their environment. Furthermore, the collegial decision-making
bodies had been important instruments for communicating important
developments between the management and the academic community.
Disbanding these forums made it much more difficult for the management
to get their message through and gather real-time feedback.
As the project progressed and the new university management was
appointed, it seems that attention patterns became more important, with
variation in results by where the key leaders turned their attention to, and
by who attended to what. As much of the strategic decision-making
revolved around the President, the process how the President‘s attention
was focused, who had access to the President, and where came the
information that the President‘s decision-making was based on, became
critical issues of the Aalto university decision-making.
6.1.3 Internal Political Constraints
Internal political constraints emerged from the data as an extremely
prominent theme second only to internal institutional constraints. There
was significant evidence supporting internal politics as a source of inertia
across different phases of the project and all informant groups. This is not
particularly surprising in light of existing literature, much of which suggests
that for instance major change, large size, maturity and high
decentralization in expert organizations generally make organizations more
susceptible to political games (Mintzberg 2009).
Probably the most characteristic political feature evident in the data was
the central position of the academic staff, especially the professors, in the
145 Discussion
perceived dominant coalition (Scott 2003) whose preferences could not be
neglected in the change effort. Even after strengthening the leadership
across the organization, centralization of power and seeking to define
academic freedom more narrowly than before, the new management
recognized that the strategic leadership of the university‘s research and
teaching was in the collective control of the academic faculty, and that the
support of at least key academics was needed for other reforms as well.
Therefore the core of the dominant coalition remained largely the same
through the transformation. What did happen, however, was that the
tripartite system was dissolved, meaning that the academics, other staff and
students no longer had formal power in the decision-making system.
Therefore it could be asked, did the other members of the academic
community than the prominent professors lose their power, if the other
staff and students were no longer part of the dominant coalition. The
answer is yes and no.
On one hand all the tripartite groups of university democracy lost their
formal power, and the representative democracy was replaced with a
system where the formal power and responsibility was concentrated on
certain leaders. Although the new leaders were more accountable for their
decisions, the debate that previously could take place openly in formal
tripartite decision-making bodies, had to move behind the scenes, where
invisible lobbyists tried to influence the decision-makers. The power of the
internal groups could remain high, but it became dependent on the
goodwill and attention of the decision-makers, and unwanted voices could
be simply ignored.
On the other hand, however, it can be questioned if the non-professor
staff and students were members of an actual dominant coalition in the old
system at all, and how open and transparent the decision-making in the
tripartite bodies really was. If the old system is considered more like a
decoupled façade of a democracy with the important decisions de facto
arranged behind the scenes by key leaders, then the dominant coalition
effectively remained the same in the transformation, constituting of all
internal groups whose support was needed for a certain initiative, with the
coalition constantly taking a new shape. In this interpretation the system
simply became more effective with clearer responsibilities. In neither case,
however, the actual decision-making system can be called especially open
or transparent although forums for debate existed.
Another interesting topic emerging from the data is the issue of resource
control. Scott (2003) argues that the resource distribution is a significant
indicator of the ―true‖ goals of the management, as opposed to the
Organizational Inertia in Aalto University 146
ceremonial goals emphasized in political rhetoric. During the Aalto
transformation the resource distribution gained a variation of this
interpretation. As the academic community was expecting significant extra
resources based on political rhetoric and public discussion in the media, but
not much of the resources had actualized by 2009, much of the academic
staff interpreted the lack of resources as an indicator that Aalto was just talk
and that the rest of the promised positive reforms wouldn‘t actualize either.
Furthermore, much support could be found for the claim of Hannan and
Freeman (1977) that any alteration of organizational structure would cause
political resistance because even if the reorganization is considered
beneficial as a whole, most benefits will be shared and are realized only in
the long run, while most disadvantages of the reorganization normally
affect only a part of the organization, and are realized immediately. Even
though practically all Aalto‘s internal subgroups officially supported the
merger as a whole, in practice many of the subgroups fought back fiercely to
halt the entire transformation when they felt that their group was at a
relative disadvantage. Interestingly the source of this most intense internal
opposition seemed to circulate around the organization as the
transformation process advanced: starting from TKK top management and
TaiK students, moving to HSE top management and certain parts of TaiK,
then to TKK and HSE administration, and finally to certain more applied
science –oriented academic units of TKK and HSE.
Finally, the distinction between user and supporter –orientations
available for organizational participants (see Chapter 3.2.3) is interesting in
the context of Aalto transformation. An expected development is the change
from the Aalto Transformation Team and early Aalto University
management (that were heavily dominated by dedicated supporters) to the
later much extended Aalto University management where participants with
a more pragmatic user orientation were becoming more abundant. The
shifting balance caused some tension between the different orientations.
However, it seems that supporters were abundant not only in the Aalto
proponents, the new management and early adopters, but also in the old
universities with the dedication aimed at the existing structures instead of
Aalto. In general, there seemed to be relatively more supporters of the old
system in administration than in academic units, and more in HSE and
TaiK than in the larger TKK. From this perspective, ‗supporting a noble
cause‘ was not the privilege of Aalto management as the new managers
often liked to think, but rather a clash of supporters of different ideologies
took place. If this has been the case, a transformation story based on past
strengths might have been more effective than one based on future
147 Discussion
opportunities in such units. However, such recognition of the past proved
difficult to be integrated to the official story of a historical change.
6.1.4 Internal Institutional Constraints
Internal institutional constraints emerged as the dominant theme
characterizing organizational inertia in universities. Much of the change
effort culminated to the new management‘s attempt to change the ―control
culture‖ of the past to the ―service culture‖ of the future, but more broadly
the change was about trying to change how things were done in a university,
which required challenging the institutionalized behavior. Simultaneously it
was necessary to create a new pluralistic Aalto culture that would have
something to offer for each of the old universities with strong, long and
quite homogenous cultural roots.
The strong cultures of the old universities and their certain subunits
were a decisive factor in shaping the debate around Aalto transformation.
As Hannan and Freeman (1977) suggested, the normatively agreed
processes seemed to significantly limit the serious consideration of different
available options to only a few alternatives, which was evident for instance
in the work of the ‗theme groups‘ set up in 2008. Most of the suggestions
made by the groups were incremental developments or compromises
between existing solutions. The normative approval also granted
justification and organizing principle to forces that chose to oppose the
change by providing a common cause above mere self-interest. The
ambiguous concepts of academic freedom and classical humboldtian
university provided this ammunition for the opponents of national
university reform. The power of such concepts was so great that they were
actually used by the proponents of the change as well to support their own
cause. The management claimed that they were paving the way for
academic freedom, and even nurtured visions where the new Aalto
University would restore the original humboldtian virtues (instead of the
―misinterpreted‖ humboldtian virtues championed by their opponents) to
value, such as bringing the students back to the core of learning in the
university. This part of the management‘s rhetoric stemming from the
recognized institutions bears echoes from the work of Clemens and Cook
(1999), who claim that the most ambitious innovators may well cloak their
efforts for change in appeals to restore tradition to keep their calls for
change within accepted models.
In general, however, it seems that the Aalto management has had the
courage to challenge the old institutions directly. Therefore the
management must have seen the culture not only as something static and
Organizational Inertia in Aalto University 148
institutionalized, but also as a malleable tool that can have been used in
transforming the organization, as suggested by Gioia and Thomas (1997).
A further interesting reflection of some of the dynamics of Aalto project
is the concept of enforcement of unpopular norms introduced by Willer,
Kuwabara and Macy (2009). The writers suggest that people enforce
unpopular norms to show that they comply out of genuine conviction and
not because of social pressure. The first thought is naturally that this might
be part of the explanation why undesirable behavior such as a control
culture can develop among motivated professionals. However, it is worth
thinking that neither all the reforms actually implemented by Aalto have
been terribly popular. Might it be that some members of the university
community help to enforce any reforms proposed by Aalto management
mainly to identify themselves as genuine supporters of the new culture?
Guiding the organization through a major change necessarily demanded
charismatic leadership. Supporting the notions of for instance Barley and
Kunda (1992), Aldrich (1999) and Scott (2003), this leadership may have
interesting implications for the future of Aalto. Firstly, any routines and
processes dating back to the period of founding are resilient to change
because they are associated with the strong emotions of organization‘s early
development, increasing the vitality of cultural elements established by the
early management. Secondly, the very processes how important decisions
are made and how the structure of the organization is altered shape the
character of the organization. Therefore the informal social structure of the
Aalto University has likely adapted to maximize its influence on the early
strategic decisions and key decision-makers, and will try to retain this
influence if the decision-making structure is later tried to be changed. This
will further encourage the encoding of charismatic leadership into the
structures of the organization, meaning that even charisma can be
institutionalized.
These examples underline that the establishment of new institutions is
already rapidly progressing in the new organization, decreasing the
flexibility of the management and making any major future change
initiatives more challenging. Scott (2003: 181) has proposed that
organization develops from one stage to another during its life cycle, with
each stage requiring different type of leadership and the solutions for each
stage becoming the problems of the next. Each stage ends in a crisis that the
organization has to survive to enter the next stage, but normally the
solutions the management has to offer for solving the crisis are the
solutions of the past. It seems that Aalto has already moved to the second
such stage as it progressed from the informal planning of Aalto
149 Discussion
Transformation Team to the more serious phase run by the first Aalto
University management with established leadership structure and the
actual responsibilities of running a university. The university encountered a
crisis as it was no longer possible to run it with the same informal principles
which worked well while doing the planning, but simultaneously Aalto
started to acquire certain unwanted bureaucratic features of the old system
that it had tried to replace. Probably the most interesting question to be
asked here is that if Scott‘s model still applies, what will be the next stage of
development for Aalto University, and which will be the old solutions of the
first Aalto University management that no longer apply for the future state
of the organization. In such case the challenge for the present Aalto
management is if and how it can maintain a degree of flexibility that will
allow it to make future development of the organization possible.
6.1.5 Barriers of Entry/Exit
Entry and exit barriers represent a rather obvious inertial element for any
organization. Perhaps for this reason there was enough evidence in the data
to point out that the barriers were there, but they provided little reason for
extended debate and emerged only as a minor theme from the data.
However, there was some evidence that Aalto was trying some limits of
the barriers. Previously the barriers had simply been taken for granted
because a university was expected to fulfill a role assigned by the
government, but now there was, for instance, debate about how extensively
Aalto should continue bachelor-level education and if Aalto could divest
some disciplines to better focus on its strengths.
A further interesting speculation is the significance of the ―red queen
model‖ suggested by Barnett and Sorenson (2002). According to their
model, competition triggers organizational learning, which in turn
intensifies competition and causes some organizations to grow and evolve
quickly and establish strong barriers of entry while limiting the choice
available for the organizations involved. In principle the Finnish higher
education system was in a state of low competition before the university
reform, but the reform encouraged national and international competition
for resources and talent to boost the quality of the system. Now if the red
queen model would apply, it would imply that if even some of the
universities would increase their efforts to compete internationally, it would
start a cycle of learning and competition requiring the other universities to
join the game before the barriers of entry would grow too high. Through
this mechanism Aalto University would work to fulfill its national mission
of spearheading a wider reform.
Organizational Inertia in Aalto University 150
6.1.6 External Legitimacy Constraints
External legitimacy constraints emerged as a significant theme
characterizing both the old university system and Aalto transformation.
There were a number of authorities and pressure groups whose
expectations had to be satisfied, and that could influence Aalto through
laws, policies, resources and public debate. In general this was something
that the Aalto management thought that they could do little about, and in
fact many of these stakeholders had proven invaluable assets for Aalto to
reach its goals.
In light of the existing literature much of the observed behavior of Aalto
University in relation to external established institutions is quite
unorthodox. For instance Hannan and Freeman (1977, 1984) suggest that
the key success factor for private sector organizations is efficiency, but on
the public sector the success is largely based on isomorphism to
institutionally accepted behavior. Meyer and Rowan (1977) continue that
the best way for a complex organization of experts such as a university to
manage the conflicting needs of external legitimacy and internal efficiency
is to maintain a loosely coupled state with a legitimate façade and unofficial
but efficient processes behind the scenes (see Chapter 3.2.6). These
characterizations seem to describe rather well the old universities,
particularly TKK and HSE, and are supported by the accounts of the
informants. Nevertheless, it seems that Aalto University has been able not
only to challenge and break many of the institutionalized models, but to
actually make the system follow its own example. This sounds like a
decisive breakthrough for the proponents of Aalto as the spearhead of
national higher education reform. However, the actual interactions between
different actors are likely more dynamic.
As Pfeffer and Salancik (1978) argued, many organizations actively seek
charters from authorities and manage to institutionalize their goals and
structures in the rules enforced by the authorities. Meyer and Rowan
(1977) wrote that powerful institutions attempt to build their goals directly
into society as institutionalized rules. But in the case of Aalto University it
must be remembered that the university itself and the reform it is based on
are products of the wishes and efforts of key stakeholders such as the
government, the funders and even other rivaling universities. Therefore it is
actually a false observation that Aalto would have changed the system, but
rather that the collective need of the system to change has produced Aalto
as a test platform with a limited free will. Such a collective change of
institutionalized rules is an even more significant phenomenon than the
breakthrough of a single organization.
151 Discussion If this is indeed the case, then the next question is where the new set of
rules or new institutions came from. The answer is readily available: in the
face of globalization pressures and increasing international competition,
the universities with their most important stakeholders realized that the
system had to be changed. If the universities wanted to compete in the
international series, they could no longer use the national best practices as
the basis of evaluating their institutionalized behavior, but had to search for
new models internationally. This granted legitimacy to such models that
could not have been fitted to the framework of old institutions, such as
universities based on private foundations and run by external boards.
This unique situation allowed Aalto University to neglect established
institutionalized myths and abandon its loosely coupled structure.
However, it is less clear if the loose coupling still exists in some parts of the
organization internally, as some functions and units have not necessarily
been able to match the speed of the rapid change, and may seek to present
themselves to the new management as effective without actually complying
with the new procedures. Furthermore, it is possible that Aalto will later
resume the partially loosely coupled structure as time goes by, regulatory
environment tightens and the privileges of the university are scaled down.
6.1.7 Limitations of Collective Rationality
Limitations of Collective Rationality emerged as a primary theme especially
in the accounts of the Aalto University management. Inconsistencies and
shortcomings in decision-making were identified to be more the rule than
an exception in the behavior of the old system, but they were present in all
phases of Aalto project as well. However, these limitations of decision-
making in old and new system were different in nature.
It seems that Cohen, March and Olsen managed to describe many
features of the traditional universities with their ‗Garbage can model‘ of
organized anarchies (1972), see Chapter 3.2.7. In these organizations
preferences were often discovered through action instead of acting on the
basis of preferences, the universities‘ own processes were not necessarily
understood by their members, and the participation of the members to
different domains was often fluid. The decision-making had two dominant
elements: the inefficient collective tripartite system where the groups had a
tendency to vote against each other, and a strong tendency to avoid conflict,
risk taking and mistakes. As a result the decision-making bodies were
mostly capable to solve only trivial matters through resolution, and
especially the most important decisions such as strategies were not likely to
resolve significant issues. Instead the system had a tendency to resolve
Organizational Inertia in Aalto University 152
issues through flight and assign them somewhere else to be made (for
instance the President or deans), or through oversight if the true
consequences of the decisions were not known. This caused many structural
issues to emerge again and again in slightly different form with the system
unable to resolve them once and for all.
Before the President was appointed there was similar ambiguity in the
decision-making of emerging Aalto, as the project had no clear ownership
or the decision-makers resorted to flight to avoid binding the hands of the
upcoming President.
The new more centralized decision-making system in Aalto, on the other
hand, was at least in theory much more capable in producing and
implementing decisions, especially such decisions that did not enjoy the
support of all internal groups. The strategic decision-making was almost
entirely in the hands of the external Board and the President, who also had
to address a diverse range of internal and external matters. The potential
problems of the system were associated with the capacity and information
biases of these critical decision-makers.
The external Board was free from the internal politics of the university,
but on the other hand their time was limited and their decisions were
heavily dependent on the preparations of the introducers. Thus there was a
high risk that the Board would make decisions by oversight if the number of
issues under discussion would not be very limited.
The President faced the same challenge, as the number of issues she had
to resolve was immense, and the mechanisms how she focused her
attention had significant effect on what happened in the organization. Many
universities have tried to tackle the issue of President‘s limited resources by
appointing a separate provost to take responsibility for the internal
management. However, the centralized decision-making system obviously
served to avoid decision-making by flight, and the system had the capability
to resolve even strategic issues.
6.1.8 Limitations of Learning
Limitations of learning emerged as a moderately significant secondary
theme across the data. The management faced a tremendous challenge in
learning new skills while moving through uncharted territory in building a
new organization. The managers were also aware of their own limitations in
learning, and they resorted to hiring external management professionals,
using consultants, and utilizing the academic change management skills of
their professors.
153 Discussion Even though several writers such as Salaman (2001), Johnson (1987),
Contu, Grey and Ortenbla (2003), and even Mintzberg (2009) remind of
the limitations of the learning organization, it seems that the studied
change process has been so rapid and dynamic that the human limitations
of the management have been more significant in limiting learning than
organizational phenomena. Neither is there significant evidence
demonstrating where the learning would have failed, so learning-based
issues have not likely been especially significant sources of inertia in the
change process. On the contrary, the learning capabilities of the
management seem to have been very good.
Nevertheless, one issue worth discussing is the notion of Johnson (1987)
and Mintzberg (2009) that uncontrolled learning can lead to strategic drift,
meaning that an organization can learn away from what works. If this is
combined to Staw‘s (1976) notion of escalating commitment, it is possible
to imagine a scenario where the new management is so focused on
developing new processes and skills that the change that should be only a
tool turns into a goal in itself, and the organization actually loses important
knowledge by learning away from previous good practices. As Aalto works
as a test platform for new ideas, there is also the risk that proponents of
these ideas are ready to go to great lengths in trying to prove themselves
right. Such behavior could lead to escalating commitment, where after
initial failure the decision-makers keep investing more resources in hoping
to recoup the initial losses and not recognizing that the situation may be
hopeless.
Finally, it should be remembered that Aalto is not the first private
university in Finland. There have been several, the last of which were taken
over by the government in the 1970s. Furthermore, a large number of
university mergers have taken place internationally, only a small minority
of which have been considered successful. These facts remind of the
warnings of Levinthal and March (1993), who identified the ―learning
myopia‖ – a tendency to overlook distant times, distant places, and failures.
6.2 Limitations and suggestions for
further research
No empirical study is free of limitations, and this work is no exception.
Hopefully the limitations identified here serve not only as qualifiers of this
work, but also as pointers for future research.
The first obvious limitation is the perspective. As stated before, I believe
that the perspective of organizational inertia has been fruitful in describing
Limitations and suggestions for further research 154
the dynamics of a complex change effort and identifying issues that the
management should be conscious of. However, it would have been equally
possible to choose for instance the perspective of organizational adaptation,
and focus on the dynamic characteristics of the organization making it more
malleable.
The second limitation is the fact that this is a case study of a single case.
Considering the uniqueness of the case I believe that it has been a well-
founded decision to focus on only one case, but this can limit the
transferability of the findings. On the other hand extensive studies of major
public sector transformations have been almost nonexistent when
compared to private sector studies, and hopefully this rather detailed
analysis contributes to help this shortage.
Thirdly, part of the data used in this study, namely the interviews of
Aalto Transformation Team in 2008-09 and the staff feedback of 2009
have not been originally gathered for the purposes of this study. Of course
this may have also positive implications like reducing the researcher-
generated bias, but this data can also have some gaps that could have been
filled in a dedicated data set. A crucial benefit of this data, however, is that
it has been collected in real time when the described events were still
unfolding. Therefore it has been possible to make a longitudinal study with
no problems of retrospective questionnaires.
Finally, I identify myself not only a researcher but also a previous active
participant in the Aalto project, and a supporter of the new university, even
though without any present role in the project. However, I have done my
best to take any subjective biases into account and have focused this
research on areas with little personal contribution. I also believe that the
available tacit knowledge of the intricacies of the project has helped to
guide the research into relevant areas.
155 Discussion
6.3 Conclusions
In the beginning of this research project, I set out to serve two audiences:
The Aalto University management and the scientific community. For the
management I promised to find out what was going on in their university,
and how had organizational inertia contributed to their change effort. For
science I promised to do my best to put together the various fragments of
theory about organizational inertia and see if they could actually explain the
phenomena observed in a major university merger. I claim to have fulfilled
both my promises, but leave it to my audiences to decide if the results were
what they wanted to hear. In any case, I believe that the most important
contribution of this work is not any single punchline extracted from the
conclusions, but rather that the beauty is in the details, leaving room for
knowledgeable people to draw their own conclusions. It must be also
remembered that this study covers only the very first years of an ongoing
transformation. Therefore the results provide no answer to the question,
was Aalto University successful or not. This remains to be seen.
Scientifically the study clearly illustrates the importance of organizational
inertia as a concept, and its power to explain and classify complex
organizational phenomena as a framework. The model of eight sources of
inertia emerging from this study resembles an expanded version of the
model presented by Hannan and Freeman (1977) which was later
supplemented by Hannan, Pólós and Carroll (2003). However, where this
earlier work has been very general in defining and describing the concepts
– only by a few sentences -, I have strived to create a framework that would
have more depth and some real explaining power. Furthermore, even
though I found the labels used by Hannan and Freeman illustrative,
practically all concepts have been completely redefined, mostly
independently from their work.
The grounded framework is also very flexible in nature. It manages to
explain most of the relevant phenomena encountered during the study, with
an apparent focus in institutional, political, legitimacy and information
issues in the public sector case. However, there is reason to believe that if
the same framework would be used to analyze for instance a private sector
merger, the economically more significant themes such as sunk costs and
entry/exit barriers would become more prominent.
The study also illustrates the significance of cultural, institutional and
decision-making issues. Prominent writers like Richard Scott (2003),
Howard Aldrich (1999), Henry Mintzberg (2009), and John Meyer and
Conclusions 156
Brian Rowan (1977) seem to have been right in most of their grim
conclusions. A typical university organization is a mess of politics, rivalry,
problematic leadership and complex social networks. However, it may be
that there is more hope than these writers acknowledge, because the study
also suggests that the university organization can be more malleable than
expected. It has been asked if it is possible to lead a university. This study
suggests that it may be very hard to lead the people in a university, but the
management can certainly make an effort to lead the image of a university
by creating a compelling transformation story, and such a story may be a
powerful driver of change indeed. Gioia and Thomas (1996) gained similar
results in their study of an American university, but as their focus was
mostly in the sensemaking of top management they missed most of the
significant inertial elements emerging from other parts of the organization.
Another significant observation is the fact that organizational inertia
emerged not only as a force making the change more difficult, or change
context in the terms of this study. Instead the inertial themes observed in
the pre-merger organization formed the rationale for the entire change
effort, in other words were key triggers of change. Therefore this study
provides strong support for the subtle work of Zajac and Kraatz (1993),
suggesting that certain forces can act simultaneously to initiate and inhibit
strategic change by increasing the need while decreasing the ability to
change.
For the Aalto University management my message is that the Aalto project
has thus far gone surprisingly well considering that it has never actually
been completely under control. The positive trend is even more significant
as much of the organizational literature and international examples of past
university mergers and turnarounds paint a rather grim picture of the odds
for affecting a major change. The management has been able to identify and
satisfy the needs of key stakeholders in the surrounding society and ensure
broad external support, which has been decisive in gathering necessary
resources (including talent) and maintaining public discussion that has
supported the construction of a desired image for the new university. In
general, the management‘s principal goals (even if not necessarily all of the
means) are acknowledged also by their own academic community, and the
management has been able to come up with a compelling story that has
inspired some desired changes in the organization. The overall rate of
reforms that have been actually implemented during a relatively short
transformation period challenges the picture of universities as extremely
static organizations.
157 Discussion However, the study also reveals much of the limitations for planning and
pulling through such a complex transformation. Many of the frameworks
used by the management were very basic tools incapable of explaining the
complex social, political and cultural phenomena that actually dominated
the organization. Management also had the tendency to emphasize
principles of rational decision-making and planning, although their
decision-making was only partially rational with serious limitations for
instance in information, and many of the best results seemed to be a result
of dynamic adaptation to a rapidly changing situation rather than complex
plans that would turn out to be outdated when they were finally finished.
The management had also been successful in creating a powerful future
vision, but had trouble in communicating and implementing the vision
effectively. Furthermore, the Aalto identity and culture remain shallow and
recognized mostly by the relatively small elite when compared to the old
still vital identities of TKK, HSE and TaiK. Moreover, it remains to be seen
if Aalto will actually be successful in its goal of reducing bureaucracy, or if
the control culture will simply evolve to take a different form.
Let us now conclude this investigation of organizational inertia with a
quotation from Hedberg, Nystrom and Starbuck (1976). They suggest that
in a turbulent environment, the correct solution might not be a complex
and bureaucratic traditional organization - an organizational palace.
Instead, they suggest building an organizational tent.
In constant surroundings, one could confidently assemble an
intricate, rigid structure combining elegant and refined
components – an organizational palace. …
However, systematic procedures offer weak protection
against unpredictability, just as increased rigidity does not
effectively prepare a building for earthquakes. … Residents of
changing environments need a tent.
An organizational tent places greater emphasis on flexibility,
creativity, immediacy, and initiative than on authority,
clarity, decisiveness, or responsiveness; and an
organizational tent neither asks for harmony between the
activities of different organizational components, nor asks
that today‟s behavior resemble yesterday‟s or tomorrow‟s.
Conclusions 158
Why behave more consistently than one‟s world does?
-Hedberg, Nystrom and Starbuck (1976: 44-45, adapted from
Scott 2003: 306-307)
Perhaps Aalto University should choose a tent instead of a palace?
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ISBN 978-952-60-4207-7 (pdf) ISBN 978-952-60-4206-0 ISSN-L 1799-4977 ISSN 1799-4985 (pdf) ISSN 1799-4977 Aalto University School of Science Department of Industrial Engineering and Management www.aalto.fi
BUSINESS + ECONOMY ART + DESIGN + ARCHITECTURE SCIENCE + TECHNOLOGY CROSSOVER DOCTORAL DISSERTATIONS
Aalto-C
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011
Aalto University formally started its operations 1.1.2010, forcing a number of fundamental changes to the old organizations it is based on. These include, but are not limited to, a new top management, new management system and complete reorganization of central administration, new organizational form, moving the whole personnel from public civil service positions to private contracts, major organizational restructuring, and a stated goal of the new top management to change the culture of the university. Such a transformation would be challenging for any organization, but many writers have pointed out that many features of universities make them especially difficult to change. This study uses an extensive data set of staff feedback, top management interviews and Aalto project planning material to construct a model of eight principal sources of organizational inertia to explain and interpret the complex organizational phenomena encountered during the first years of the construction (2007-2010) of a new university.
Markus H
eimonen
Organizational Inertia in a S
trategic Pub
lic Sector M
erger: Case A
alto University
Aalto
Unive
rsity
Department of Industrial Engineering and Management
Organizational Inertia in a Strategic Public Sector Merger: Case Aalto University Markus Heimonen
RESEARCH REPORT CROSSOVER